    [Senate Hearing 114-611]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 114-611

               THE FISCAL YEAR 2017 BUDGET FOR VETERANS' PROGRAMS

    =======================================================================

                                    HEARING

                                   BEFORE THE

                         COMMITTEE ON VETERANS' AFFAIRS
                              UNITED STATES SENATE

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                               FEBRUARY 23, 2016

                                   __________

           Printed for the use of the Committee on Veterans' Affairs

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             Available via the World Wide Web: http://www.fdsys.gov

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                         COMMITTEE ON VETERANS' AFFAIRS

                       Johnny Isakson, Georgia, Chairman
    Jerry Moran, Kansas                  Richard Blumenthal, Connecticut,
    John Boozman, Arkansas                   Ranking Member
    Dean Heller, Nevada                  Patty Murray, Washington
    Bill Cassidy, Louisiana              Bernard Sanders, (I) Vermont
    Mike Rounds, South Dakota            Sherrod Brown, Ohio
    Thom Tillis, North Carolina          Jon Tester, Montana
    Dan Sullivan, Alaska                 Mazie K. Hirono, Hawaii
                                         Joe Manchin III, West Virginia
                           Tom Bowman, Staff Director
                     John Kruse, Democratic Staff Director

                                C O N T E N T S

                                  ----------

                               February 23, 2016

                                    SENATORS

                                                                       Page
    Isakson, Hon. Johnny, Chairman, U.S. Senator from Georgia........     1
    Blumenthal, Hon. Richard, Ranking Member, U.S. Senator from
      Connecticut....................................................     2
    Rounds, Hon. Mike, U.S. Senator from South Dakota................    58
    Tester, Hon. Jon, U.S. Senator from Montana......................    60
    Moran, Hon. Jerry, U.S. Senator from Kansas......................    62
    Brown, Hon. Sherrod, U.S. Senator from Ohio......................    64
    Tillis, Hon. Thom, U.S. Senator from North Carolina..............    66
    Sullivan, Hon. Dan, U.S. Senator from Alaska.....................    69
    Cassidy, Hon. Bill, U.S. Senator from Louisiana..................    71
    Boozman, Hon. John, U.S. Senator from Arkansas...................    73

                                   WITNESSES

    McDonald, Hon. Robert A., Secretary, U.S. Department of Veterans
      Affairs; accompanied by Hon. David J. Shulkin, M.D., Under
      Secretary for Health; Danny Pummill, Acting Under Secretary for
      Benefits; Ronald E. Walters, Interim Under Secretary for
      Memorial Affairs; Hon. LaVerne Council, Assistant Secretary for
      Information and Technology and Chief Information Officer; and
      Ed Murray, Interim Secretary for Management and Interim Chief
      Financial Officer..............................................     3
        Prepared statement...........................................     7
        Response to prehearing questions submitted by Hon. Johnny
          Isakson....................................................    34
        Response to posthearing questions submitted by:
          Hon. Johnny Isakson........................................    75
          Hon. Dean Heller...........................................   172
          Hon. Mike Rounds...........................................   172
          Hon. Dan Sullivan..........................................   172
          Hon. Richard Blumenthal....................................   174
          Hon. Sherrod Brown.........................................   182
          Hon. Mazie K. Hirono.......................................   183

                       Independent Budget Representatives

    Blake, Carl, Associate Executive Director, Government Relations,
      Paralyzed Veterans of America..................................   234
        Prepared joint statement of IBVSOs...........................   239
    Varela, Paul, Assistant National Legislative Director, Disabled
      American Veterans..............................................   236
        Response to request arising during the hearing by Hon. Johnny
          Isakson....................................................   261
    Kelley, Ray, Director, National Legislative Service, Veterans of
      Foreign Wars of the United States..............................   237

                      Other Veterans Service Organizations

    Celli, Louis J., Jr., Director, National Veterans Affairs and
      Rehabilitation, The American Legion............................   255
        Prepared statement...........................................   256

               THE FISCAL YEAR 2017 BUDGET FOR VETERANS' PROGRAMS

                                  ----------

                           TUESDAY, FEBRUARY 23, 2016

                                           U.S. Senate,
                                Committee on Veterans' Affairs,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10:02 a.m., in
    room 418, Russell Senate Office Building, Hon. Johnny Isakson,
    Chairman of the Committee, presiding.
        Present: Senators Isakson, Moran, Boozman, Cassidy, Rounds,
    Tillis, Sullivan, Blumenthal, Brown, Tester, Hirono, and
    Manchin.

               OPENING STATEMENT OF HON. JOHNNY ISAKSON,
                  CHAIRMAN, U.S. SENATOR FROM GEORGIA

        Chairman Isakson. Welcome to the Senate Committee on
    Veterans' Affairs. Thank you for being here today. Mr.
    Secretary, thank you for coming today and bringing your cast of
    thousands. You have got a lot of support here today. We have
    got the Secretary--big budget, big support.
        We are proud to have Secretary McDonald here today. We are
    proud to have Danny Pummill, Dr. Shulkin--great to have you
    here, and thanks for the great job you are doing--Ronald
    Walters, LaVerne Council, and Ed Murray. We appreciate all of
    you being here. With all that support, Mr. Secretary, I am sure
    you are going to do a great job.
        I will make my opening statement and then turn to Senator
    Blumenthal, and then we will go straight to your testimony. As
    in the last case, Mr. Secretary, I do not want you to feel
    compelled by our customary 5-minute standard. I want you to be
    able to say what you have to say, understanding the average
    attention span of a U.S. Senator is probably about 9 minutes.
    [Laughter.]
        After that, we all start blinking. Speaking for myself;
    that is a self-imposed limitation.
        Thank you very much, Mr. Secretary, for being here today.
    We are looking forward to discussing the $182 billion budgetary
    appropriation for the Veterans Administration, an 8.9-percent
    increase over the fiscal year 2016 budget. Should it be
    adopted, medical care funding would increase by $3.8 billion,
    or 6.3 percent.
        The Office of Information Technology, or IT, would be
    increased by $145 million. I am very encouraged that you have
    embraced a program to merge the non-VA programs to see to it
    that Choice is delivered correctly and appropriately and funded
    well. We look forward to hearing your discussion on that.
        Your testimony also talks a little bit about
    accountability. In fact, I read the information.
    ``Accountability'' is a word that is used one time, but it is
    probably the most important thing that this Committee is really
    interested in.
        You and I had a great meeting at your office last week, Mr.
    Secretary, and I want to acknowledge publicly with the Members
    of the Committee to thank Senator Blumenthal and Senator
    Murray's staff for the work they are doing.
        I have stated publicly--and I am doing it again right now
    publicly--that my goal is to see to it that by the end of March
    we have an accountability bill for the Veterans Administration
    employees that is right for the veterans and right for those
    employees, and that we look to the future to see to it, if we
    have problems in the future--which I hope we will never have
    them, but life is life; you are going to have them--that we
    have a defensible accountability system within the Department
    to correct a wrong and make it not happen again.
        We have had too many cases, most of them, if not all of
    them are pre-your service, Mr. Secretary. The Inspector General
    reports from 2 and 3 years ago that are impossible to explain,
    highlight lack of accountability and implementation that is
    impossible to understand. We want to put that behind us for the
    future and build a platform that is good for the employees,
    good for middle management, and good for the Veterans
    Administration, but, most importantly, good for the veterans
    themselves. They need to know they are getting quality services
    and quality accountability. It is very important that we do
    that. That is the most important thing that we can do.
        Last, you talked about reforming the appeals process. I
    hope you will address that in your remarks. That is something
    we have talked about many times, have not done, and it is
    something we rightfully need to do. I would love to know as
    much specifics about what you are going to recommend as
    possible.
        We are glad you are here today. We appreciate your service
    to the country. It is an honor for me to now introduce the
    Ranking Member, Senator Blumenthal.

             OPENING STATEMENT OF HON. RICHARD BLUMENTHAL,
             RANKING MEMBER, U.S. SENATOR FROM CONNECTICUT

        Senator Blumenthal. Thanks, Mr. Chairman, and I want to
    second your remarks about the need for an accountability bill
    which is, I think, making progress with very close bipartisan
    cooperation between our staffs and ourselves. I want to thank
    the Secretary and the President for a very robust and
    profoundly significant budget. The VA is going through major
    changes as it looks toward the future and prepares for an even
    more challenging future so far as the needs of our veterans are
    concerned in areas of not only health care but also jobs, job
    training, and skill preparation and, of course, homelessness.
    Connecticut, I am very delighted to say, is at the forefront of
    that effort, in fact, announced just last week that we have
    ended homelessness for veterans in Connecticut. Of course, that
    is a continuing effort. It is a milestone, not a finish line,
    and we need to continue to provide permanent housing for all of
    our veterans, not just a temporary or transitional forms of
    housing.
        This budget request focuses, fortunately, on a number of
    areas that I think are important, breakthrough priorities such
    as community health care, accountability, and the appeals
    process. I also think that in terms of our medical care, the
    challenges of Post Traumatic Stress and the research and
    outreach that needs to be done need to be given priority.
        I hope that this hearing will be an opportunity to hear
    from you about more of the details of this proposal, but I also
    think that the vision for the future is tremendously important
    not only this year but looking beyond this year, just as you
    would at a company like Proctor & Gamble--beyond this quarter,
    beyond this year--to think about what this enterprise is going
    to look like in 5 years, in 10 years. Now is the time to build
    for the veterans who will be coming out of the service, and
    there will be more and more of them over the next few years as
    we downsize our active-duty force.
        So, I thank you for being here. I am looking forward to
    hearing from you and from the veterans service organizations
    that perform such an important and vital role in keeping us
    informed about veterans' needs while making sure that all of us
    are held accountable.
        Thank you.
        Chairman Isakson. Thank you, Senator Blumenthal.
        Mr. Secretary, it is all yours.

         STATEMENT OF HON. ROBERT A. MCDONALD, SECRETARY, U.S.
     DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY HON. DAVID J.
       SHULKIN, M.D., UNDER SECRETARY FOR HEALTH; DANNY PUMMILL,
    ACTING UNDER SECRETARY FOR BENEFITS; RONALD E. WALTERS, INTERIM
      UNDER SECRETARY FOR MEMORIAL AFFAIRS; HON. LAVERNE COUNCIL,
     ASSISTANT SECRETARY FOR INFORMATION AND TECHNOLOGY AND CHIEF
       INFORMATION OFFICER; AND ED MURRAY, INTERIM SECRETARY FOR
             MANAGEMENT AND INTERIM CHIEF FINANCIAL OFFICER

        Secretary McDonald. Thank you, Mr. Chairman.
        Chairman Isakson, Ranking Member Blumenthal, and Members of
    the Committee, thanks for the opportunity to present the
    President's 2017 budget and 2018 advance appropriations
    requests for the Department of Veterans Affairs. I have a
    written statement that I ask be submitted for the record, Mr.
    Chairman.
        Mr. Chairman, the President's proposal is another strong,
    tangible sign of his devotion to veterans and their families.
    It proposes $182.3 billion for the Department in fiscal year
    2017, which includes $78.7 billion in discretionary funding, a
    4.9-percent increase above the 2016 enacted level, largely for
    health care. It includes $12.2 billion for care in the
    community and a new medical community care budget account
    consistent with the VA budget and Choice Improvement Act. It
    includes $103.6 billion in mandatory funding for veterans
    benefit programs and $103.9 billion in advance appropriations
    for our three major mandatory veterans benefit accounts.
        It supports VA's four agency priority goals and our five
    MyVA transformational objectives to modernize VA and improve
    the veteran experience, improve the employee experience,
    improve internal support services, establish a culture of
    continuous improvement, and expand strategic partnerships.
    Those five transformational objectives are about growing VA
    into the high-performance organization veterans deserve and
    taxpayers expect.
        I learned over three decades in the private sector at
    Procter & Gamble what makes a high-performance organization. It
    takes a clear purpose, strong values, enduring principles, and
    technical competence. High-performance organizations depend on
    sound strategies. They thrive with passionate leaders who are
    willing to take tough decisions and make bold changes to
    improve. High-performance organizations require responsive
    systems and processes designed and managed in a high-performing
    culture.
        Well, VA has a clear purpose in our most noble mission to
    care for those who have borne the battle. We have strong core
    values: integrity, commitment, advocacy, respect, and
    excellence. Our strategic plan makes clear that we are a
    customer service organization. We serve veterans.
        Our 5 MyVA transformational objectives and our 12
    breakthrough priorities for 2016 are about accomplishing that
    strategy. Ten of our top 16 executives are new since I became
    Secretary. They are part of a growing team of talented,
    enthusiastic former business leaders and experienced Government
    and health care professionals. They are making innovative
    changes and creating opportunities for even greater progress.
        We are making the sweeping changes necessary for VA to be a
    high-performing organization, and we will know we are getting
    there when, by design, veterans' needs shape our systems, our
    processes, and our culture.
        For example, a responsive health care system for veterans
    means: veterans have 24/7 access to VA systems and know where
    to get accurate answers, whether that is their Veteran Contact
    Center or the Veterans Crisis Line; veterans calling or
    visiting primary care facilities and medical centers have their
    clinical needs addressed the very same day; veterans calling
    for new mental health appointments receive suicide risk
    assessments and immediate care, if needed; and veterans already
    engaged in mental health care who need urgent attention speak
    to a provider the very same day.
        For employees serving veterans, it means a high-performing
    culture where continuous improvement drives responsive, forward
    thinking and innovative change. It means training our workforce
    on advanced business techniques. It means responsive
    performance management systems that resonate with employees and
    encourage rather than discourage continuous improvement and
    excellence. It means proper employee placement, clear
    performance expectations, continuous feedback, and employees
    equipped with the tools to achieve excellence. It means
    executive performance ratings and bonuses that reflect actual
    performance and take into account relevant inputs like veteran
    outcomes, results of employee surveys, and 360-degree feedback.
    It means modern automated systems in place of antiquated,
    cumbersome, and costly paper processes. These are a few
    characteristics of high-performing systems, processes, and
    culture. We are advancing along these lines and many others.
        We launched our cascading Leading Developing Leaders
    training last year with 450 senior field leaders. It is not a
    single event. It is a continuous enterprise-wide process of
    leaders teaching leaders teaching leaders in order to inculcate
    lasting change. So far, we have trained more than 5,000
    employees. By the year's end, we will have trained over 12,000
    senior leaders, empowering teams to dramatically improve care
    and service delivery to veterans while creating better work
    environments for employees.
        Private sector leadership experts are developing VA teams
    in new ways with cutting-edge business skills like Lean Six
    Sigma and Human Centered Design. We are using Human Centered
    Design and Lean Six Sigma right now to redesign the
    compensation and pension process because veterans find it
    confusing and burdensome. We are looking at industry best
    practices and planning for an automatic performance management
    solution for general schedule employees. We can streamline that
    process, improve rating accuracy, and interface with OPM. All
    of this is focused on moving VA into the ranks of high-
    performing organizations. That goal is in reach, but we need
    your continued support to achieve it.
        I appreciate our extensive discussion at the end of January
    on our MyVA 12 breakthrough priorities for 2016. The proposed
    budget continues support of those priorities into 2017. It
    provides $65 billion for veterans' medical care, a 6.3-percent
    increase over 2016. It provides $66.4 billion in advance
    appropriations for the VA medical care programs in 2018. That
    is a 2.2-percent increase above the 2017 request. It provides
    $7.8 billion for mental health, funds Veteran Contact Centers
    in the field and Veterans Crisis Line modernization. It funds
    telehealth access, enhances health programs for women veterans,
    and provides an incredibly effective hepatitis C treatment to
    an expected 35,000 veterans.
        To help integrate all the MyVA initiatives across the
    enterprise, it provides $2.6 million for the MyVA program
    office. To continue training field employees on advanced
    business skills and establishing high customer service
    standards, it increases funding for our Veteran Experience
    Office by 47 percent.
        We will continue doing all we can to squeeze as much as
    possible out of every single budget dollar.
        Our pharmacy benefits management program avoided $4.2
    billion in unnecessary drug expenditures last year. We saved
    over half a billion dollars in travel spending since 2013,
    exceeding goals of the President's campaign to cut waste. We
    have reduced employee award spending $150 million, and we have
    reduced SES bonuses 64 percent between 2011 and 2015 by
    rigorously linking awards to performance.
        Since 2011, we have saved $16.6 million using more
    efficient training and meeting methods. We are already saving
    $10 million annually under our MyVA's five-district structure
    that we announced in January 2015.
        We have saved approximately $5.5 million from 2011 to 2015
    by strengthening controls over permanent change-of-station
    moves. Now that we have implemented electronic claims
    processing, we will save millions of dollars each year in paper
    storage.
        We are committed to doing everything we can with everything
    we are given, but many, many important priorities for
    meaningful change require substantial congressional action.
    There are more than 100 legislative proposals in the budget.
    Over 40 of them are new this year, and some are absolutely
    critical just to maintain our current ability to purchase non-
    VA care.
        It is critical that VA is competitive with the private
    sector so we can attract top talent. Nowhere is that more
    important than in health care. So, among other VHA personnel
    authority adjustments, we are proposing flexibility on the
    maximum 80-hour pay period requirement for certain medical
    professionals. It will help improve hospital operations and
    attract the best possible hospital staff who prefer more
    flexible schedules. We are proposing critical compensation
    reforms for network and hospital directors.
        Likewise, the Title 38 SES proposal we are working on is
    about being competitive with the private sector in recruiting
    and in compensation. It is not just about firing people. It is
    about treating VA career executives more like their private
    sector counterparts. It is the kind of flexibility that
    attracts top performers in the private sector as well. VA needs
    that flexibility, too.
        We need your help to transform and streamline VA's care in
    the community systems and programs to best serve veterans. We
    need your help modernizing and clarifying VA's purchase care
    authorities to maintain veterans' access to timely community
    care everywhere in the country. We have provided Congress with
    detailed legislation addressing this challenge more than 9
    months ago, and I have consistently identified it as a top
    legislative priority. Above all, this needs to get done in this
    Congress to ensure that strong foundation for access to
    community care.
        Artificial funding restrictions are unresponsive to
    veterans' needs, so we are proposing a general transfer
    authority that allows me some measured spending flexibility to
    respond to the veterans' emerging needs.
        The appeals process set by statute is archaic,
    unresponsive, and not serving veterans well. Last year, the
    Board was still adjudicating an appeal that originate 25 years
    ago and had been decided more than 27 times. The budget
    proposes a simplified, streamlined, and fair appeals process so
    that 5 years from now veterans have appeals resolved within 1
    year of filing. While requiring short-term staffing increases
    to contend with the 445,000 pending appeals, legislating a
    simplified appeals process can save more than $139 million
    beginning in 2022.
        We need congressional authorization of 18 leases submitted
    in VA's 2015 and 2016 budget request as well as authorization
    of eight major construction projects included in the fiscal
    year 2016 budget.
        We need your support for six additional replacement major
    medical facility leases, two major construction projects, and
    four cemetery projects in the 2017 budget. Passing special
    legislation for VA's West Los Angeles campus will get us
    positive results for veterans in that community who are most in
    need.
        I have outlined a few opportunities for change here. This
    Congress, with today's VA's leadership, can make these changes
    and more for all veterans and for veterans in the future. Then
    we can look back on this year as the year that we turned the
    corner.
        I appreciate the support you have shown veterans, the
    Department, and the MyVA transformation. On behalf of veterans
    and the VA employees serving them every single day, thank you
    for this opportunity. We look forward to your questions.
        Thank you, Mr. Chairman.
        [The prepared statement of Secretary McDonald follows:]
           Prepared Statement of Hon. Robert A. McDonald, Secretary,
                      U.S. Department of Veterans Affairs
        Good morning, Chairman Isakson, Ranking Member Blumenthal, and
    Distinguished Members of the Senate Veterans' Affairs Committee. Thank
    you for the opportunity to present the President's 2017 Budget and 2018
    Advance Appropriations (AA) requests for the Department of Veterans
    Affairs (VA). This budget continues the President's faithful support of
    Veterans and their families and survivors, and it sustains VA's
    historic transformation. It will provide the funding needed to enhance
    services to Veterans in the short term, while strengthening the
    transformation of VA that will better serve Veterans in the future.
                            a vision for the future
        VA's vision for the future is to be the No. 1 customer-service
    agency in the Federal Government. The American Customer Satisfaction
    Index already rates our National Cemetery Administration No. 1 with
    respect to customer service. In addition, for the sixth year in a row,
    VA's Consolidated Mail Outpatient Pharmacy received J.D. Power's
    highest customer satisfaction score among the Nation's public and
    private mail-order pharmacies. These are compelling examples of
    excellence. We aim to make that so for all of VA.
        We are transforming the entire Department, not just making
    incremental changes to parts of it. We began in July 2014 by
    immediately reinforcing the importance of our inspiring mission--caring
    for those ``who shall have borne the battle,'' their families, and
    their survivors. Then, we re-emphasized our commitment to our
    exceptional I-CARE Values--Integrity, Commitment, Advocacy, Respect,
    and Excellence. To provide timely quality care and benefits for
    Veterans, everything we are doing is built, and must be built, on the
    rock-solid foundation of mission and values.
        MyVA is the catalyst making VA a world-class service provider. It
    is a framework for modernizing VA's culture, processes, and
    capabilities so we put the needs, expectations, and interests of
    Veterans and their families first, and put Veterans in control of how,
    when, and where they wish to be served.
        Listening to others' perspectives and insights has been, and
    remains, instrumental in shaping our transformation. We have taken
    advantage of an unprecedented level of outreach to the field and our
    stakeholders.
        In my first months as Secretary, I assessed VA and recognized that
    we would need to change fundamental aspects of every part of VA in
    order to rise to excellence. I shared my assessment's results with
    President Obama and received his guidance. I discussed my findings with
    you and other Members of Congress--privately and during hearings. And I
    consulted with literally thousands of Veterans, VA clinicians, VA
    employees, and Veteran Service Organizations (VSOs) and other
    stakeholders in dozens of meetings.
        Since my July 29, 2014, confirmation, I have made 277 visits to VA
    field sites in more than 100 cities, including 47 visits to VA medical
    centers, 30 visits to homeless Veterans program sites, 16 visits to
    Community Based Outpatient Clinics, 15 Regional Offices, and 9
    Cemeteries. I have attended 61 Veteran engagements through public and
    private partnerships and 60 stakeholder events to hear firsthand the
    problems and concerns impacting our Veterans. To recruit individuals to
    work for VA as medical professionals and in other critical fields, I
    have visited 50 medical schools, universities, and other educational
    institutions. This kind of outreach, partnership, and collaboration
    underpins our department-wide transformation to change VA's culture and
    make the Veteran the center of everything we do.
    Progress
        Transforming an organization of this size is an enormous
    undertaking. It will not happen overnight. But we are now running the
    government's second largest Department like a $166 billion Fortune 6
    organization should be run. That is, balancing near term performance
    improvements while rebuilding VA's long-term organizational health.
        Effective change often requires new leadership, and we have made
    broad changes. Of our top 16 executives, 10 are new to their positions
    since I became Secretary. Our team today includes extensive executive
    expertise from the private sector: a former banking industry Chief
    Financial Officer and President of the USO; the former Chief Executive
    Officer of Beth Israel Medical Center in New York City and Morristown
    Medical Center in New Jersey; a former Chief Executive of Jollibee
    Foods and President of McDonald's Europe; a former Chief Information
    Officer of Johnson & Johnson and Dell Inc.; a former partner in
    McKinsey & Company's Transformational Change and Operations
    Transformation Practices; a retired partner in Accenture's Federal
    Services Practice; a former Chief Customer Officer for the city of
    Philadelphia who previously spent 10 years at United Services
    Association of America (USAA), one of the best and foremost customer-
    service organizations in the country; a former entrepreneur and CEO of
    multiple technology companies; and a retired Disney executive who spent
    2010-2011 at Walter Reed National Military Medical Center enhancing the
    patient experience.
        Most members of the executive leadership team are Veterans
    themselves. They have served from Vietnam to Iraq and Afghanistan, and
    each is here because he or she demonstrates a personal commitment to
    our mission. These fresh, diverse perspectives, combined with our more
    experienced government and health care executives, will continue to
    catalyze innovation and change.
        Thanks to the continuing support of Congress, VSOs, union leaders,
    our dedicated employees, states, and private industry partners, we have
    made tremendous headway over the past 18 months. In 2015, we made
    notable progress building the momentum that will begin delivering
    transformational changes that VA needs.
        Congress has passed key legislation--such as the Veterans Access,
    Choice, and Accountability Act and the Clay Hunt Suicide Prevention for
    American Veterans Act--that gives VA more flexibility to improve our
    culture and ability to execute effectively.
        Consistent with the culture of a High Performance Organization that
    serves Veterans and their families, we have turned VA's structural
    pyramid upside down. Veterans and their families are at the top. The
    Office of the Secretary is at the bottom, supporting subordinate
    leaders and the workforce who are serving Veterans. This method of
    thinking and operating is a reminder to all employees and stakeholders
    that we are here to support our Veterans, not our bosses.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        While reinforcing our I-CARE Values, we are transitioning from a
    rules-based culture that may neglect the human dimension of service to
    a principles-based culture grounded in values, sound judgment, and the
    courage and opportunity ``to choose the harder right instead of the
    easier wrong . . ..''
        We formed a MyVA Advisory Committee (MVAC) to advise us on our
    transformation. The MVAC is comprised of a diverse group of business
    leaders, medical professionals, experienced government executives, and
    Veteran advocates. The Chairman is retired Major General Joe Robles,
    former Chairman and CEO of USAA. The Vice Chairman is Dr. J. Michael
    Haynie, Air Force Veteran, Vice Chancellor of Syracuse University and
    founder of the Institute for Veteran and Military Families (IVMF). The
    MVAC includes executives with deep customer service and transformation
    expertise from organizations such as Amazon, The Cleveland Clinic,
    McKinsey & Company, Johns Hopkins, Mayo Clinic, as well as a former
    Surgeon General, a former White House doctor for three US Presidents, a
    university president who was a Rhodes Scholar from the Air Force
    Academy who currently serves as a reserve Air Force Lieutenant Colonel,
    and advocates for both the traditional VSOs and post-9/11 Veterans'
    organizations.
        Private sector leadership experts are bringing cutting-edge
    business skills and developing VA teams in new ways. We are training
    critical pockets of our workforce on advanced techniques like Lean and
    Human Centered Design. For example, working with the University of
    Michigan, we have already trained more than 5,000 senior leaders across
    the Nation in our ``Leaders Developing Leaders.'' The Veterans Benefits
    Administration (VBA), Veterans Health Administration (VHA), and our
    Veterans Experience team collaborated using Human Centered Design and
    Lean techniques to redesign the Compensation and Pension Examination
    (C&P Exam) process because we received consistent feedback that the
    process--often, a Veteran's first impression of the VA when separating
    from service--can be a confusing and uncomfortable experience.
        Across VA, we are encouraging different perspectives and listening
    to all of our key stakeholders, even those who are critical of VA. To
    benchmark and capture ideas and best practices along our transformation
    journey, we have been working collaboratively with world-class
    institutions like Procter & Gamble, USAA, Cleveland Clinic, Wegmans,
    Starbucks, Disney, Marriott and Ritz-Carlton, NASA, Kaiser Permanente,
    Hospital Corporation of America, Virginia Mason, DOD, and GSA, among
    others.

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        VA named the Department's first Chief Veteran Experience Officer
    and began staffing the office that will work with the field to
    establish customer service standards, spread best practices, and train
    our employees on advanced business skills.
        Rather than asking Veterans to navigate our complicated internal
    structure, we are redesigning functions and processes to fit Veteran
    needs in the spirit of General Omar Bradley's 1947 proposition that
    ``We are dealing with Veterans, not procedures; with their problems,
    not ours.''
        We are realigning VA to facilitate internal coordination and
    collaboration among business lines--from nine disjointed, disparate
    organizational boundaries and organizational structures to a single
    framework. That means down-sizing from 21 service networks to 18 that
    are aligned in five districts and defined by state boundaries, except
    in California. This realignment means opportunities for local level
    integration, and it promotes consistently effective customer service.
    Veterans from Florida to California, Puerto Rico to Maine, Alaska and
    Guam, and all parts in between, will see one VA.
        We have developed a multi-year plan for creating a world-class
    Information Technology organization, and on November 11, Veterans Day,
    we launched the Vets.gov initial capability. Developed with support
    from the U.S. Digital Services Team and informed by extensive feedback
    from Veterans, Vets.gov is a modern, mobile-first, cloud-based website
    that will replace numerous other websites and website logins with a
    single, easy to navigate location. The website puts Veteran needs and
    wishes first, and we will continue to add the capability that's
    required to improve its accessibility and usefulness. As Vets.gov
    evolves, it will simplify the Veteran experience by re-using and making
    consistent Veteran information, including mailing address and phone
    number, across the agency.
        At VA, we know that serving Veterans is a collaborative exercise,
    so we will not function in a vacuum. We are operating as part of a
    community of care, forming strategic partnerships with external
    organizations to leverage the goodwill, resources, and expertise of
    valuable partners to better serve our Nation's Veterans and help
    address a wide variety of Veteran needs, including employment,
    homelessness, wellness, and mental health. Partners include respected
    organizations like the YMCA, the Elks, the PenFed Foundation, LinkedIn,
    Coursera, Google, Walgreens, academic institutions, other Federal
    agencies, and many more. These partnerships reflect our commitment to
    re-thinking how VA does business so we can leverage the strengths of
    others who also care for Veterans.
        We have enabled 39 Community Veterans Engagement Boards, a national
    network designed to leverage all community assets, not just VA assets,
    to meet local Veteran needs. Sixteen more communities are in
    development right now.

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        We have renewed and redefined working relationships with our union
    partners, and union leaders are part of the team, and have had
    significant input into MyVA. We continue to work with them to address
    issues and make sure our employees are involved often and early in
    every major decision.
        We are continuing to develop a robust provider network while we
    streamline business processe s and re-imagine how we obtain services
    such as billing, reimbursement credentialing, and information sharing.
        We continue to listen, learn, and grow.
                           va's agency priority goals
        In 2015, we were guided by and made notable progress toward
    reaching our three Agency Priority Goals (APGs)--(1) Improve Veteran
    Access to VA Benefits and Services, (2) End Veteran Homelessness, and
    (3) Eliminate the Disability Backlog. These accomplishments toward
    achieving our APGs demonstrate VA's commitment to using our resources
    effectively to improve care and benefits for Veterans.
    Access
        We expanded capacity by focusing on staffing, space, productivity,
    and VA Community Care.
        Access. Since discovering the access challenges in Phoenix,
    Arizona, we have aggressively improved access to care, not just in
    Phoenix but across VA as a whole. For instance, in the first 12 months
    after discovering the Phoenix appointment backup, from June 2014 to
    June 2015, we completed 7 million more appointments than during the
    same period the year prior: 2.5 million of those appointments were at
    VA; 4.5 million appointments were in the community. Altogether in FY
    2015, we completed 56.7 million appointments, nearly 2 million more
    than FY 2014. More than 97 percent (55 million) of those 56.7 million
    appointments were completed within 30 days of the clinically indicated
    or Veteran's preferred date, an increase of 1.4 million over FY 2014
    numbers.
        Veteran access is one of the five critical priorities supporting VA
    health care transformation with far-reaching impact across VA that
    Under Secretary for Health, Dr. David J. Shulkin announced in
    September 2015. With the Access Stand Downs, VHA is empowering each
    facility to focus on the needs of its specific population and
    refocusing people, tools, and systems on a journey of continuous
    improvement toward same-day access for primary care and urgent
    specialty care. The immediate goal is that no patients with urgent
    appointment requests in VA clinics with the most critical clinical
    needs, such as cardiology, urology, and mental health, are waiting more
    than 30 days.
        From November 9, through November 13, 2015, VHA conducted a
    complete review of all Veterans waiting for appointments--with a focus
    on those Veterans waiting for clinically important and acute services--
    to ensure that the wait was clinically appropriate as determined by the
    Veteran's treatment team. This process culminated with the VHA's first
    Access Stand Down on November 14th--a nationwide effort to ensure
    Veterans get the right care at the right time.
        In the first Access Stand Down, VHA reviewed nearly 55,800 of the
    more than 56,000 Level One, stat, consults that were open more than 30
    days (as of November 6, 2015), a herculean effort. Of those 55,800
    urgent open consults reviewed, 82 percent (45,849) were scheduled or
    closed by the end of that first Stand Down.
        Building on the November 14th Access Stand Down momentum and
    success, VHA is continuing to maximize accessibility to outpatient
    services with the coming February 27th, 2016 Access Stand Down. The
    February Stand Down is an opportunity to make another significant leap
    in dramatically enhancing Veterans' access to care. Clinical operations
    will meet customer demand through resource-neutral, continuous
    improvement at the facility-level and scaling-up excellence across the
    enterprise.
        VetLink data is another way we are listening to Veterans. Since
    September 2015, VHA has analyzed preliminary data from VetLink, our
    kiosk-based software that allows us to collect real-time customer
    satisfaction information. In all three separate VetLink surveys to
    date--related to nearly half-a-million appointments--Veterans told us
    that about 90 percent of the time, they are either ``completely
    satisfied'' or ``satisfied'' with getting the appointment when they
    wanted it. However, about 3 percent of Veterans who participated in the
    survey were either ``dissatisfied'' or ``completely dissatisfied,'' so
    we have more work to do.
        Staffing. We increased net VHA staffing. VHA hired 41,113
    employees, for a net increase of 13,940 health care staff, a 4.7
    percent increase overall. That increase included 1,337 physicians and
    3,612 nurses, and we filled several critical leadership positions,
    including the Under Secretary of Health.
        Space. We activated 2.2 million square feet in FY 2015, adding to
    more than 1.7 million square feet of clinical space activated in FY
    2014.
        Productivity. We increased physician work Relative Value Units
    (RVUs) by 9 percent. VA completed more than 1.4 million extended hour
    completed encounters in primary care, mental health and specialty care
    in FY 2014 and more than 1.5 million in FY 2015, an increase of 5.7
    percent in extended hour encounters.
                Care in the Community
        In 2015, VA obligated $10.5 billion for Care in the Community,
    including resources provided through the Veterans Choice Act--an
    increase of $2.3 billion (28 percent) over the 2014 level--which
    resulted in nearly 2.4 million authorizations for Veterans to receive
    Care in the Community from December 3, 2014 through December 2, 2015.
    Programmatically, this included care in the community for Veterans'
    dialysis, state home programs, community nursing care, Veterans home
    programs, emergency care, private medical facilities care, and care
    delivered at Indian health clinics. It also includes care under VA's
    CHAMPVA program for certain dependents who were entitled for that care.
    Homelessness
        Veteran homelessness has continued to decline, thanks in large part
    to unprecedented partnerships and vital networks of collaborative
    relationships across the Federal Government, across state and local
    government, and with both non-profit and for-profit organizations.
    Ending and preventing Veteran homelessness is now becoming a reality in
    many communities, including: the Commonwealth of Virginia; the State of
    Connecticut; New Orleans, Louisiana, Houston, Texas; Las Vegas, Nevada;
    Philadelphia, Pennsylvania; Syracuse, New York; Winston-Salem, North
    Carolina; and Las Cruces, New Mexico. In collaboration with our Federal
    and local partners, we have greatly increased access to permanent
    housing; a full range of health care including primary care, specialty
    care, and mental health care; employment; and benefits for homeless and
    at-risk for homeless Veterans and their families.
        In FY 2015 alone, VA provided services to more than 365,000
    homeless or at-risk Veterans in VHA's homeless programs. Nearly 65,000
    Veterans obtained permanent housing through VHA Homeless Programs
    interventions, and more than 36,000 Veterans and their family members,
    including 6,555 children, were prevented from becoming homeless.
        Overall Veteran homelessness dropped by 36 percent between 2010 and
    2015, based on data collected during the annual Point-in-Time (PIT)
    Count conducted on a single night in January 2015. We saw a nearly 50
    percent drop in unsheltered Veteran homelessness. Since 2010, more than
    360,000 Veterans and their family members have been permanently housed,
    rapidly rehoused, or prevented from falling into homelessness.
    Backlog
         VA transitioned disability compensation claims processing from a
    paper-intensive process to a fully electronic processing system; as a
    result, 5,000 tons of paper per year were eliminated.
        In FY 2015, VA decided a record-breaking 1.4 million disability
    compensation and pension (rating) claims for Veterans and their
    survivors--the highest in VA history for a single year. As of
    December 31, 2015, VA had driven down the disability claims backlog to
    75,480, from a peak of over 611,000 in March 2013.

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    2016-2017 VA's Agency Priority Goals
        In a collaborative, analytic process, VA has established our four
    new Agency Priority Goals (APGs). In FYs 2016 and 2017, our four APGs
    buildupon and preserve progress we made in 2015. The new APGs will help
    accelerate transformation to MyVA and advance our framework for
    allocating resources to improve Veteran outcomes. Our new APGs are to
    (1) Improve Veterans Experience with VA, (2) Improve VA Employee
    Experience, (3) Improve Access to Health Care as Experienced by the
    Veteran, and (4) Improve Dependency Claims Processing. While no longer
    APGs, VA will continue to buildupon the progress it has already made
    related to ending Veterans' Homelessness and eliminating the
    compensation rating claims backlog.
                             fy 2017 budget request
        Our 2017 budget requests the necessary resources to allow us to
    serve the growing number of Veterans who selflessly served our Nation.
        The 2017 Budget requests $182.3 billion for VA--$78.7 billion in
    discretionary funding (including medical care collections) and $103.6
    billion in mandatory funding for Veterans benefit programs. The
    discretionary request reflects an increase of $3.6 billion (4.9
    percent) over the 2016 enacted level. The budget also requests 2018
    advance appropriations (AAs) of $66.4 billion for Medical Care and
    $103.9 billion for three mandatory accounts that support Veterans
    benefit payments (i.e., Compensation and Pensions, Readjustment
    Benefits, and Insurance and Indemnities).
        We value the support that Congress has demonstrated in providing
    the resources needed to honor our Nation's Veterans. We are seeking
    your support for legislative proposals contained in the 2017 Budget--
    including many already awaiting Congressional action--to enhance our
    ability to provide Veterans the benefits and services they have earned
    through their service. The Budget also proposes a new General Transfer
    Authority that would allow VA to move discretionary funds across line
    items. Flexible budget authority would give VA greater ability to avoid
    artificial restrictions that impede our delivery of care and benefits
    to Veterans.
                     rising demand for va care and benefits
        Veterans are demanding more services from VA than ever before. As
    VA becomes more productive, the demand for benefits and services from
    Veterans of all eras continues to increase, and Veterans' demand for
    benefits has exceeded VA's capacity to meet it.
        In 2014, when the Phoenix access difficulties came to light, VA had
    300,000 appointments that could not be completed within 30 days of the
    date the Veteran needed or wanted to be seen. To meet that demand, VA
    rallied to add capacity to complete 300,000 more appointments each
    month, or about 3.5 million additional appointments annually.
        Despite these extraordinary measures to increase capacity, VA was
    unable to absorb Veterans' increasing demand for health care. The
    number of Veterans waiting for appointments more than 30 days rose by
    about 50 percent, to roughly 450,000 between 2014 and 2015, so we are
    aggressively working on innovative ways to address that challenge, and
    VHA's new Access Stand Downs are central to VHA's healthcare
    transformation efforts and addressing that challenge.
        The trend of a growing demand for VA health care is fueled by more
    than a decade of war, Agent Orange-related disability claims, an
    unlimited claim appeal process, demographic shifts, increased medical
    issues claimed, and other factors. Additionally, survival rates among
    Americans who served in conflicts have increased, and more
    sophisticated methods for identifying and treating Veteran medical
    issues continue to become available. And, VA now serves a population
    that is older, has more chronic conditions, and is less able to afford
    care in the private sector. Workload will continue to increase as the
    military downsizes and Veterans regain trust in VA.

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        In 2017, the number of Veterans receiving medical care at VA will
    be over 6 million. VA expects to provide more than 115 million
    outpatient visits in 2017, an increase of 8.4 million visits over 2016,
    through both VA and Care in the Community.
        Compared to FY 2009, the number of patients is projected to
    increase by 22 percent by FY 2017. And, as Veterans see the results of
    VA's transformation, we are confident that the number of Veterans
    utilizing VA services will continue to rise. Currently, 11 million of
    the 22 million Veterans in this country are registered, enrolled, or
    use at least one VA benefit or service.
        Veterans' health care and benefit requirements continue to increase
    decades after conflicts' end, and this fact is a fundamental, long-term
    challenge for VA. Forty years after the Vietnam War ended, the number
    of Vietnam Era Veterans receiving disability compensation has not yet
    peaked. VA anticipates a similar trend for Gulf War Era Veterans, only
    26 percent of whom have been awarded disability compensation.

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        Today, there are an estimated 22 million Veterans. The number of
    Veterans is projected to decline to around 15 million by 2040. However,
    while the absolute number may decline, an aging Veteran population
    requires greater care, services, and benefits. In 2017, 46 percent (or
    9.8 million) of the 22 million Veteran population will be 65 years old
    or older, a dramatic increase since 1975 when only 7.5 percent (or 2.2
    million) of the Veteran population was 65 years old or older.
        While the percent of the Veteran population receiving compensation
    was nearly constant at 8.5 percent for more than 40 years, over the
    past 15 years there has been a striking increase to 20 percent. The
    total number of service-connected disabilities for Veterans receiving
    compensation grew from 11.8 million in 2009 to 19.7 million in 2015, an
    increase of more than 67 percent in just six years. This dramatic
    growth, combined with estimates based on historic trends, predicts an
    even greater increase in claims for more benefits as Veterans age and
    disabilities become more acute.

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        The increase in Veterans receiving compensation is accompanied by a
    significant increase in the average degree of disability granted to
    Veterans for disability compensation. For 45 years, from 1950 to 1995,
    the average degree of disability held steady at 30 percent. But, since
    2000, the average degree of disability has risen to 49 percent. VBA's
    mandatory request for 2017 is $103.6 billion, twice the amount spent in
    FY 2009.

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        As VA continues to improve access and quality of care, more
    Veterans will come to VA for more of their care. Veterans today often
    choose VA for care either because of personal preference or because of
    VA's economic edge. Some 78 percent of enrolled Veterans at VA have
    other choices like Medicare, Medicaid, TRICARE, or private insurance.
    Out-of-pocket cost for Veterans at VA is often lower, and cost
    considerations are a key factor in Veterans' demand for VA health care.
    In 2014, Veteran enrollees received only 34 percent of their total
    health care through VA, accounting for about $53 billion in 2014 costs.
    Just a one percent increase in Veteran reliance on VA health care will
    increase costs by $1.4 billion.
                   productivity improvements and stewardship
        The MyVA transformation will ensure VA is a sound steward of the
    taxpayer dollar. We are instituting operational efficiencies, cost
    savings, productivity improvements, and service innovations to support
    this and future budget requests. We are assessing all aspects of VA
    operations using a business lens and pursuing changes so VA will
    deliver care and services more efficiently and effectively at the
    highest value to Veterans and taxpayers. For instance, few realize that
    when it comes to the general operating expense of distributing over a
    hundred-billion dollars in benefits to over 5.3 million Veterans and
    survivors, VBA spends only about 3 cents on the dollar. By any measure,
    that's an excellent return on investment. Our Reports, Approvals,
    Meetings, Measurements, and Policies (RAMMPs) process identifies
    practices to streamline or, in some cases, eliminate entirely. To free
    capacity and empower employees to identify counter-productive or
    wasteful activities that management can eliminate, VA leaders at all
    levels of the organization are using RAMMP to address opportunities for
    improvement that employees have identified.

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        To boost efficiency and employee productivity, VA is quickly moving
    to paperless claims processing from its historically manual, paper-
    intensive process. Modernizing to an electronic claims processing
    system has helped VBA increase claim productivity per claims processor
    by 25 percent since 2011 and medical issue productivity by 82 percent
    per claims processor since 2009. This significant productivity increase
    helped mitigate the effects of the 131 percent increase in workload
    between 2009 and 2015, when the number of medical issues rose from 2.7
    million to 6.4 million. VA's shift to electronic claims processing has
    meant converting paper files to eFolders. Between 2012 and 2015, the
    Veterans Claims Intake Program (VCIP) scanned nearly 6 million claims
    files into Veterans' eFolders in the Veterans Benefits Management
    System (VBMS). VBA has removed more than 7,000 tons of claims-related
    papers formerly undermining efficiency, hampering productivity, and
    cluttering workspace.
        In FY 2015, VBA deployed its innovative Centralized Mail Initiative
    to 56 regional offices (ROs) and one pension management center (PMC).
    Centralized Mail reroutes inbound compensation and pension claims-
    related mail directly to Claims and Evidence Intake Centers at document
    conversion services vendor sites, an innovation that improves
    productivity and enabled digital analysis of more than four million
    mail packets. Through Centralized Mail, VBA can more efficiently manage
    the claims workload, and prioritize and distribute claims
    electronically across the entire RO network, maximizing resources and
    improving processing timeliness.
        To strengthen financial management and stewardship, in FY 2015 VA
    launched its multi-year effort to replace VA's antiquated, 30-year-old
    core Financial Management System (FMS) with a 21st century system that
    will vastly improve VA financial management accuracy and transparency.
    The modernization effort requires robust enterprise-wide support across
    the Department. In FY 2015, VA committed to using a shared service
    solution and engaged the Department of Treasury's Office of Financial
    Innovation and Transformation (FIT) to pursue a Federal Shared Service
    Provider that leverages existing, successful investments and
    infrastructure across the government and meets our financial management
    system needs while supporting VA's mission of serving Veterans. VA also
    stood up a Program Management Office, initially staffed with 5 FTE from
    existing resources to lead and manage the effort, and identified an OIT
    Project Manager. VA has worked to compile lessons-learned from other
    agencies engaged in this effort and from VA's previous attempts to
    modernize the FTE, to ensure the effort is successful. Tasks ahead
    include strategies, roadmaps, and project plans, business process re-
    engineering, and engaging in significant change management activities.
        Recent challenges managing non-VA care program finances have
    demonstrated the great risks and immense burden of the FMS legacy
    system. FMS failure would severely impede the Department's ability to
    execute its budget, pay vendors and Veterans, and produce accurate
    financial statements.
                        closing unsustainable facilities
        It is well-past time to close VA's old, substandard, and
    underutilized facilities. VA's 2016 Budget testimony last year
    explained that VA cannot be a sound steward of taxpayer resources with
    the asset portfolio it carries, and each year of delay makes the
    situation more costly and untenable. No sound business would carry such
    a portfolio, and Veterans and taxpayers deserve better.

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        VA currently has 370 buildings that are fully vacant or less than
    50 percent occupied, which are excess to our needs. These vacant
    buildings account for over 5.2 million square feet of unneeded space.
    In addition, we have 770 buildings that are underutilized, accounting
    for more than 6.3 million square feet that are candidates to be
    consolidated to improve utilization and lower costs. This means we have
    to maintain over 1,100 buildings and 11.5 million square feet of space
    that is unneeded or underutilized--taking funding from needed Veteran
    services. We estimate that it costs VA $26 million annually to maintain
    and operate these vacant and underutilized buildings. For example, when
    attempting to demolish the vacant storage facility in Bedford,
    Massachusetts, VA encountered environmental issues that prevented the
    demolition, forcing VA to either pay costly remediation costs to
    demolish a building we no longer need or maintain facilities such as
    this across the system.

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         Bedford, Massachusetts--Vacant Storage Building, built in 1939

        As the Veteran population has migrated, VA's capital infrastructure
    has not kept pace. We continue to operate medical facilities where the
    Veteran population is small or shrinking. Our smallest hospitals often
    do not have sufficient patient volume and complexity of care
    requirements to maintain the clinical skills and competencies of
    physicians and nurses.
                        ensuring veterans access to care
        The President's 2017 Budget will allow VA to operate the largest
    integrated health care system in the country, including nearly 1,300 VA
    sites of health care and approximately 6 million Veterans receiving
    care; the eleventh largest life insurance provider, covering both
    active duty Servicemembers and enrolled Veterans; compensation and
    pension benefit programs serving more than 5.3 million Veterans and
    survivors; education benefits to more than one million students;
    vocational rehabilitation and employment benefits to more than 140,000
    disabled Veterans; a home mortgage program that will guarantee more
    than 429,000 new home loans; and the largest national cemetery system
    that leads the industry as a high-performing organization, with
    projections to inter more than 132,000 Veterans and family members in
    2017.
        The 2017 Budget requests $65 billion for medical care, an increase
    of $3.9 billion (6.3 percent) over the 2016 enacted level. The increase
    in 2017 is driven by Veterans' demand for VA health care as a result of
    demographic factors, economic assumptions, investments in access, and
    high priority investments for caregivers, new Hepatitis C treatments,
    and support for Veterans Health Information Systems and Technology
    Architecture (VistA) Evolution. The 2017 request supports programs to
    end and prevent Veteran homelessness, invests in strategic initiatives
    to improve the quality and accessibility of VA health care programs,
    continues implementation of the Caregivers and Veterans Omnibus Health
    Services Act, and provides for activation requirements for new or
    replacement medical facilities. The 2017 appropriations request
    includes an additional $1.7 billion above the enacted 2017 AA for
    Veterans medical care. The request assumes approximately $3.6 billion
    annually in medical collections in 2017 and 2018. For the 2018 Advance
    Appropriations for medical care, the current request is $66.4 billion.
    Hepatitis C Treatment
        Although the Hepatitis C virus infection (HCV) takes years to
    progress, it is the main cause of advanced liver disease in the United
    States. Treatment of this disease remains a high priority because its
    cure dramatically lowers patients' risk of liver failure, liver cancer,
    and death.
        VA is the largest single provider of care in the Nation for chronic
    HCV, and over the next five years, VA will strive to provide treatment
    to all Veterans with HCV who are treatment candidates. For FY 2017, VA
    is requesting $1.5 billion for the cost of Hepatitis C drugs and
    clinical resources. With a budget of $1.5 billion in FY 2017, VA
    expects to treat 35,000 patients with HCV. At the beginning of FY 2016,
    almost 120,000 Veterans in VA care were awaiting HCV treatment, of whom
    approximately 30,000 have advanced liver disease.
        VA successfully negotiated extremely favorable pricing for both of
    the new treatments available--Harvoni and Viekira--from two different
    drug manufacturers by stressing VA's proven ability to deliver market
    share, VA's large HCV population, and the long-term impact that VA's
    physician residency programs can have on post-residency prescribing
    practices.
        During FY 2015, VA medical facilities treated more than 30,000
    Veterans for HCV with these new drugs with remarkable success,
    achieving cure rates of 90 percent, similar to those seen in clinical
    trials.
        VA clinicians have rapidly adopted new, more effective therapies
    for HCV as they have become available. New therapies are costly and
    require well-trained clinical providers and support staff, presenting
    resource challenges for the Department. VA will focus resources on the
    sickest patients and most complex cases and continue to build capacity
    for treatment through clinician training and use of telehealth
    platforms. Patients with less advanced disease are being offered
    treatment through the Veterans Choice program in partnership with
    community HCV providers.
    Care in the Community
        VA is committed to providing Veterans access to timely, high-
    quality health care. The 2017 Budget includes $12.2 billion for Care in
    the Community and includes a new Medical Community Care budget account,
    consistent with the VA Budget and Choice Improvement Act (P.L. 114-41).
    Of the total that will be spent on non-VA care in FY 2017, $7.5 billion
    will be provided through a transfer of the 2017 enacted AA from the
    Medical Services account to the new budget account, and $4.7 billion
    will be provided through the resources provided in the Veterans Choice
    Act for implementation of the Veterans Choice Program.
        The Choice Act increased VA's in-house capacity by funding medical
    personnel growth in VA facilities and expanded eligibility for Care in
    the Community to ensure access to care within 30 days and to provide
    care closer to home for enrollees residing more than 40 miles from a VA
    facility (the 40-mile group).
        This additional capacity facilitated an increase in enrollees'
    reliance on VA health care by more than half a percent over the level
    expected in FY 2015. This growth was the result of enrollees increasing
    their use of VA funded health care versus their use of other health
    care options (Medicare, Medicaid, commercial insurance, etc.).
        The FY 2015 growth in enrollee reliance was largely in Care in the
    Community, with the 40-mile group generating a more significant
    increase in care:

         In FY 2015, enrollees' reliance on VA health care
    increased by 0.7 percent overall. Reliance for the 40-mile group
    increased by 2.8 percent from 32.5 percent to 35.3 percent.
         The increase in reliance was mostly driven by growth in
    Care in the Community. Cost sharing levels in VA are lower than what is
    typically available elsewhere, which provides an incentive for
    enrollees to use VA-paid Care in the Community.
        Enrollee reliance on VA health care is expected to continue to
    increase in 2016 and beyond to service the unmet demand that the Choice
    Act was enacted to address.
        On October 30, 2015, VA provided Congress with a plan for the
    consolidation and improvement of all purchased care programs into one
    New Veterans Choice Program (New VCP). Consistent with this report, the
    2017 Budget will include legislative proposals to streamline and
    improve VA's delivery of Community Care.
    Caregiver Support Program
        Caregivers give their time and love in countless behind-the-scenes
    ways. Whether they are helping with transportation to and from
    appointments, helping the Veteran apply for benefits, or helping with
    meals, bathing, clothing, medication, the spectrum of care is wide and
    compassion runs deep.
        The 2017 Budget requests $725 million for the National Caregivers
    Support Program to support nearly 36,600 caregivers, up from about
    30,600 in FY 2016. Funding requirements for caregivers are driven by an
    increase in the eligible Veteran population, with caregiver enrollment
    increasing by an average of about 500 each month.
                          ending veteran homelessness
        The ambitious goal of ending Veteran homelessness has galvanized
    the Federal Government and local communities to work together to solve
    this important National problem. Our systems are designed to help
    prevent homelessness whenever possible, and our goal is a systematic
    end to homelessness, meaning that there are no Veterans sleeping on our
    streets and every Veteran has access to permanent housing. Should
    Veterans become homeless or be at-risk of becoming homeless, there will
    be capacity to quickly connect them to the help they need to achieve
    housing stability.
        The 2017 Budget supports VA's commitment to ending Veteran
    homelessness by emphasizing rescue for those who are homeless today and
    prevention for those at risk of homelessness. The 2017 Budget requests
    $1.6 billion for VA homeless-related programs, including case
    management support for the Department of Housing and Urban Development
    (HUD)-VA Supportive Housing program (HUD-VASH), the Grant and Per Diem
    Program, VA justice programs, and the Supportive Services for Veteran
    Families program.
        In FY 2015 and FY 2016, VA committed more than $1.5 billion
    annually to strengthen programs that prevent and end homelessness among
    Veterans. Communities that have reached the goal or are close to
    effectively ending homelessness rely heavily on VA targeted homeless
    resources. Communities that have a sustainment plan are depending on
    those resources to be available as they continue to tackle homelessness
    and sustain the support for Veterans who have moved into permanent
    housing, ensuring that they maintain housing stability and do not fall
    back into homelessness.
        VA will continue to advocate for its continuum of homeless services
    to address the needs associated with preventing first-time
    homelessness, as well as the needs of those who return to homelessness,
    and focus on the root causes associated with homelessness, including
    poverty, addiction, mental health, and disability.
        Congress has an important role, as well, in ensuring adequate
    resources to meet the needs of those most vulnerable Veterans by
    enacting authorizations and other legislation to provide VA with a full
    complement of tools to combat homelessness--including legislation that
    is a prerequisite to carry out dramatic improvements to our West Los
    Angeles campus centered on the needs of Veterans.
                               benefits programs
        The 2017 Budget requests $2.8 billion and 22,171 FTE for VBA
    General Operating Expenses, an increase of $93.4 million (3.4 percent)
    over the 2016 enacted level. The request includes an additional 300
    full-time equivalent (FTE) employees for non-rating claims.
        With the resources requested in the 2017 Budget, VA will provide:

         Disability compensation and pension benefits for 5.3
    million Veterans and survivors, totaling $86 billion;
         Vocational rehabilitation and employment benefits to
    nearly 141 thousand disabled Veterans, totaling $1.4 billion;
         Education benefits totaling $14 billion to more than one
    million Veterans and family members;
         Guaranty of more than 429,000 new home loans; and
         Life insurance coverage to 1.0 million Veterans, 2.2
    million Servicemembers, and 2.8 million family members.

        Improving the quality and timeliness of disability claim decisions
    has been integral to VBA's transformation of benefits delivery. VBA
    successfully streamlined a complex and paper-bound compensation claims
    process and implemented people, process, and technology initiatives
    necessary to optimize productivity and efficiency. In alignment with
    the MyVA initiative, VBA is working to further improve its operations
    with a focus on the customer experience. We are implementing
    enhancements to enable integration across our programs and
    organizational components, both inside and outside of VBA.
        VBA has processed an unprecedented number of rating claims in
    recent fiscal years (nearly 1.4 million in 2015, and more than 1
    million per year for the last 6 years). However, its success has
    resulted in other unmet workload demands. As VBA continues to receive
    and complete more disability rating claims, the volume of non-rating
    claims, appeals, and fiduciary field examinations increases
    correspondingly.
         Non-rating claims. VA completed nearly 37 percent more
    non-rating work in 2015 than 2013--and 15 percent more than 2014. The
    2017 Budget requests $29.1 million for an additional 300 non-rating
    claims processors to reduce the non-rating claims inventory and provide
    Veterans with more timely decisions on non-rating claims.
         Appeals. Over the last 20 years, appeal rates have
    continued to hold steady at between 11 and 12 percent of completed
    claims. As VBA continues to receive and complete record-breaking
    numbers of disability rating claims, the volume of appeals
    correspondingly increases. As of December 31, 2015, there were more
    than 440,000 benefits-related appeals pending in the Department at
    various stages in the multi-step appeals process, which divides
    responsibility between VBA and the Board of Veterans' Appeals (Board)--
    355,803 of those benefits-related appeals are in VBA's jurisdiction and
    85,682 are within the Board's jurisdiction.
        Under current law, VA appeals framework is complex, ineffective,
    and opaque, and veterans wait on average 5 years for final resolution
    of an appeal. The 2017 Budget supports the development of a Simplified
    Appeals Process to provide veterans with a simple, fair, and
    streamlined appeals procedure in which they would receive a final
    appeals decision within 365 days from filing of an appeal by FY 2021.
    The 2017 Budget provides funding to support over 900 FTE for the Board
    and proposes a legislative change that will improve an outdated and
    inefficient process which will benefit all veterans through expediency
    and accuracy. We look forward to working with Congress, Veterans, and
    other stakeholders to implement improvements.
         Fiduciary program. The fiduciary program served 29 percent
    more beneficiaries in 2015 than it served in 2014. Program growth is
    primarily due to an increase in the total number of individuals
    receiving VA benefits and an aging population of beneficiaries.
    Additionally, in 2015 the fiduciary program changed the way it captures
    beneficiary population data and now reports all beneficiaries served
    during the course of the fiscal year. In 2015, fiduciary personnel
    conducted more than 84,000 field examinations, and VBA anticipates
    field examination requirements will exceed 97,000 in 2017.
         Housing program. The 2017 Budget includes $34 million for
    the VA Loan Electronic Reporting Interface (VALERI) to manage the 2.4
    million VA-guaranteed loans for Veterans and their families. VALERI
    connects VA with more than 320,000 Veteran borrowers and more than
    225,000 mortgage servicer contacts. VA uses the VALERI tool to manage
    and monitor efforts taken by private-sector loan servicers and VA staff
    in providing timely and appropriate loss mitigation assistance to
    defaulted borrowers. Without these resources, approximately 90,000
    Veterans and their families would be in jeopardy of losing their homes
    each year, potentially costing the government an additional $2.8
    billion per year. VALERI also supports payment of guaranty and
    acquisition claims.

        The Budget requests the following advance appropriations amounts
    for 2018: $90.1 billion for compensation and pensions, $13.7 billion
    for readjustment benefits, and $107.9 million for insurance and
    indemnities. VA will continue to closely monitor workload and monthly
    expenditures in these programs and will revise cost estimates as
    necessary in the Mid-Session Review of the 2017 Budget, to ensure the
    enacted advance appropriation levels are sufficient to address
    anticipated veteran needs throughout the year.
                       the simplified appeals initiative
        The current VA appeals process is broken. The more than 80-year-old
    process was conceived in a time when medical treatment was far less
    frequent than it is today, so it is encumbered by some antiquated laws
    that have evolved since WWI and steadily accumulated in layers.
        Under current law, the VA appeals framework is complex,
    ineffective, confusing, and understandably frustrating for Veterans who
    wait much too long for final resolution of their appeal. The current
    appeals system has no defined endpoint, and multiple steps are set in
    statute. The system requires continuous evidence gathering and multiple
    re-adjudications of the very same or similar matter. A Veteran,
    survivor, or other appellant can submit new evidence or make new
    arguments at any time, while VA's duty to assist requires continuous
    development and re-adjudication. Simply put, the VA appeals process is
    unlike other standard appeals processes across Federal and judicial
    systems.
        Fundamental legislative reform is essential to ensure that Veterans
    receive timely and quality appeals decisions, and we must begin an
    open, honest dialog about what it will take for us to provide Veterans
    with the timely, fair, and streamlined appeals decisions they deserve.
    To put the needs, expectations, and interests of Veterans and
    beneficiaries first--a goal on which we can all agree--the appeals
    process must be modernized.

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        The 2017 Budget proposes a Simplified Appeals Process--legislation
    and resources (i.e., people, process, and technology) that would
    provide Veterans with a simple, fair, and streamlined appeals process
    in which they would receive a final decision on their appeal within one
    year from filing the appeal by FY 2021.
        The 2017 Budget requests $156.1 million and 922 FTE for the Board,
    an increase of $46.2 million and 242 FTE above the FY 2016 enacted
    level. This is a down-payment on a long-term, sustainable plan to
    provide the best services to Veterans. This policy option also
    represents the best value to taxpayers (as outlined in the chart,
    Analysis of Alternatives).
        Without legislative change or significant increases in staffing, VA
    will face a soaring appeals inventory, and Veterans will wait even
    longer for a decision on their appeal. If Congress fails to enact VA's
    proposed legislation to simplify the appeals process, Congress would
    need to provide resources for VA to sustain more than double its
    appeals FTE, with approximately 5,100 appeals FTE onboard. The prospect
    of such a dramatic increase, while ignoring the need for structural
    reform, is not a good result for Veterans or taxpayers.

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         Simplified Appeals Process: Ramp Up and Long-Term Sustainment

        While the Simplified Appeals proposal would require FTE increases
    for the first several years to resolve the more than 440,000 currently
    pending appeals, by 2022, VA would be able to reduce appeals FTE to a
    sustainment level of roughly 1,030 FTE (including 980 FTE at the Board
    and 50 at VBA), a level sufficient to process all simplified appeals in
    one year. Notably, such a sustainment level is 1,135 FTE less than the
    current 2016 budget requires, and is 4,070 FTE less Department-wide
    than would be required to address this workload with FTE resources
    alone. In addition, this reform would essentially eliminate the need
    for appeals FTE at VBA, allowing these resources to be redirected
    within VBA to other priorities.
        In 2015, the Board was still adjudicating an appeal that originated
    25 years ago, even though the appeal had previously been decided by VA
    more than 27 times. Under the Simplified Appeals Process, most Veterans
    would receive a final appeals decision within one year of filing an
    appeal. Additionally, rather than trying to navigate a multi-step
    process that is too complex and too difficult to understand, Veterans
    would be afforded a transparent, single-step appeal process with only
    one entity responsible for processing the appeal.

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      In today's Convoluted Appeals Process, Veterans Wait 5 Years for a
                                    Decision

        Essentially, under a simplified appeals process, as soon as a
    Veteran files an appeal, the case would go straight to the Board where
    a Judge would review the same record considered by the initial
    decisionmaker and issue a final decision within one year; informing the
    Veteran whether that initial decision was substantially correct,
    contained an error that must be corrected, or was simply wrong. If a
    Veteran disagrees with any or all of the final appeals decision, the
    Veteran always has the option of filing a new claim for the same
    benefit once the appeal is resolved, or may pursue an appeal to the
    Court of Appeals for Veterans Claims.
        Rapid growth in the appeals workload exacerbates this challenge. As
    VBA has produced record-setting claims-decision output over the past
    five years, appeals volume has grown commensurately. Between
    December 2012 and November 2015, the number of pending appeals rose by
    34 percent. Under current law with no radical change in resources, the
    number of pending appeals is projected to soar by 397 percent--from
    437,000 to 2.17 million (chart, Status of Appeals)--between
    November 2015 and FY 2027.

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        VA firmly believes that justice delayed is justice denied. In the
    streamlined appeals process proposed in the FY 2017 President's Budget
    (chart, Proposed Simplified Appeals), there would be a limited
    exception allowing the Board to remand appeals to correct duty to
    notify and assist errors made on the part of the Agency of Original
    Jurisdiction (AOJ) prior to issuance of the initial AOJ decision.

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                        medical and prosthetic research
        The 2017 Budget continues VA's program of groundbreaking, high
    standard research focused on advancing the health care needs of all
    Veterans. The 2017 Budget requests $663 million for Medical Research
    and supports the President's Precision Medicine Initiative (PMI) to
    drive personalized medical treatment and the evolving science of
    Genomic Medicine--how genes affect health. In addition to the direct
    appropriation, Medical Research will be supported through $1.3 billion
    from VA's Medical Care program and other Federal and non-Federal
    research grants. Total funding for Medical and Prosthetic Research will
    be more than $2.0 billion in 2017.
        VA research is focused on the U.S. Veteran population and allows VA
    to uniquely address scientific questions to improve Veteran health
    care. Most VA researchers are also clinicians and health care providers
    who treat patients. Thus, VA research arises from the desire to heal
    rather than pure scientific curiosity and yields remarkable returns.

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                    The First Powered Ankle-Foot Prosthesis

        For more than 90 years, VA research has produced cutting-edge
    medical and prosthetic breakthroughs that improve the lives of Veterans
    and others. The list of accomplishments includes therapies for
    tuberculosis following World War II, the implantable cardiac pacemaker,
    computerized axial tomography (CAT) scans, functional electrical
    stimulation systems that allow patients to move paralyzed limbs, the
    nicotine patch, the first successful liver transplants, the first
    powered ankle-foot prosthesis, and a vaccine for shingles. VA
    researchers also found that one aspirin a day reduces by half the rate
    of death and nonfatal heart attacks in patients with unstable angina.
    More recently, VA investigators tested an insulin nasal spray that
    shows great promise in warding off Alzheimer's disease and found that
    prazosin (a well-tested generic drug used to treat high blood pressure
    and prostate problems) can help improve sleep and lessen nightmares for
    those with Post Traumatic Stress Disorder.
        Beyond VA's support of more than 2,200 continuing research
    projects, VA will leverage our Million Veteran Program (MVP)--already
    one of the world's largest databases of genetic information--to support
    several Precision Medicine Initiatives. The first initiative will
    evaluate whether using a patient's genetic makeup to inform medication
    selection is effective in reducing complications and getting patients
    the most effective medication for them. This initiative will focus on
    up to 21,500 Veterans with PTSD, depression, pain, and/or substance
    abuse.

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                    VA's Million Veteran Program Recruitment

        The second initiative will focus on additional analysis of DNA
    specimens already collected in the MVP. More than 438,000 Veteran
    volunteers have contributed DNA samples so far. Genomic analysis on
    these DNA specimens allows researchers to extract critical genetic
    information from these specimens. There are several possible ``levels''
    of genomic analyses, with increasing cost.
        Built into the design of MVP and currently funded within the VA
    research program is a process known as ``exome chip'' genotyping--the
    tip of the iceberg in genomic analysis. Exome Chip genotyping provides
    useful information, but newer technologies promise significantly
    greater information for improving treatments. VA proposes conducting
    the next level of analysis, known as ``exome sequencing,'' on up to
    100,000 Veterans who are enrolled in MVP. This exome sequencing
    analyzes the part of the genome that codes for proteins--the large,
    complex molecules that perform most critical functions in the body.
    Sequencing efforts will begin with a focus on Veterans with PTSD and
    frequently co-occurring conditions such as depression, pain, and
    substance abuse, and expand to other chronic illnesses such as diabetes
    and heart disease, among others. This more detailed genetic analysis
    will provide greater information on the biological factors that may
    cause or increase the risk for these illnesses.
        VA's research and development program improves the lives of
    Veterans and all Americans through health care discovery and
    innovation.
                                other priorities
    Information Technology
        The 2017 Budget demonstrates VA's commitment to using cutting-edge
    information technology (IT) to support transformation and ensure that
    the Veteran is at the center of everything we do. The Budget requests
    $4.28 billion--an increase of $145 million (3.5 percent) from the 2016
    enacted level--to help stabilize and streamline core processes and
    platforms, eliminate the information security material weakness, and
    institutionalize new capabilities to deliver improved outcomes for
    Veterans. The request includes $471 million for new efforts to develop,
    improve, and enhance clinical and benefits systems and processes and
    supports VA's strategy to replace FMS. The 2017 Budget was developed
    through Federal IT Acquisition Reform Act (FITARA) compliant processes
    led by the Chief Information Officer (CIO), in concert with the Chief
    Financial Officer and Chief Acquisition Officer.
        In FY 2015, the Office of Information and Technology (OIT)
    developed an IT Enterprise Strategy and an Enterprise Cybersecurity
    Strategy. These strategies support OIT's vision to become a world-class
    organization that provides a seamless, unified Veteran experience
    through the delivery of state-of-the-art technology. OIT is
    implementing a new IT Security Strategy to improve VA's security
    posture and eliminate the Federal Information Security Management Act/
    Federal Information System Controls Audit Manual material weakness.
        The 2017 Budget includes $370.1 million for information security,
    an increase of 105 percent over the FY 2016 funding level. In addition,
    the 2017 Budget includes $50 million to launch a new Data Management
    program to use data as a strategic resource. Under this program, VA
    will inventory its data collection activities--with the objective of
    requesting data from the Veteran only once--and dispose expired
    information in a secure and timely way. These two aspects will reduce
    VA costs for data storage and support safeguards for Veterans'
    information.
    National Cemetery Administration
        The National Cemetery Administration (NCA) has the solemn duty to
    honor Veterans and their families with final resting places in national
    shrines and with lasting tributes that commemorate their service and
    sacrifice to our Nation. The 2017 Budget requests $286 million, an
    increase of $15 million (5.5 percent) to allow VA to provide perpetual
    care for more than 3.5 million gravesites and more than 8,800 developed
    acres. The Budget supports NCA's efforts to raise and realign
    gravesites and repair turf in order to maintain cemeteries as national
    shrines. The Budget also continues implementation of a Geographic
    Information System to enable enhanced accounting of remains and
    gravesites and enhanced gravesite location for visitors. The Budget
    positions NCA to meet Veterans' emerging burial and memorial needs in
    the decades to come by ensuring that Veterans and their families
    continue to have convenient access to a burial option in a National,
    state, or tribal Veterans cemetery and that the service they receive is
    dignified, respectful, and courteous.
                               va infrastructure
        The 2017 Budget requests $900.2 million for VA's Major and Minor
    construction programs. The Budget invests in infrastructure projects at
    existing campuses that will lead to seismically safe facilities,
    ensuring that Veterans are safe when they seek care. The capital asset
    budget request demonstrates VA's commitment to address critical Major
    construction projects that directly affect patient safety and seismic
    issues, and reflects VA's promise to provide safe and secure facilities
    for Veterans. The 2017 Budget also requests funding to ensure that VA
    has the ability to provide eligible Veterans with access to burial
    services through new and expanded cemeteries, and prevent the closure
    to new interments in existing cemeteries.
        VA acknowledges the transformation underway in the landscape for
    health care delivery. Our future space needs may be impacted by the
    changes we are already implementing in how we deliver care for
    Veterans. In addition, we plan to potentially incorporate any
    recommendations from the Commission on Care and their impact on our
    changing service delivery into our long-term infrastructure strategy.
        Leasing provides flexibility and enables VA to more quickly adapt
    to changes in medical technology, workload, new programs, and
    demographics. VA is also looking to Congress for authorization of 18
    leases submitted in VA's FY 2015 and 2016 Budget requests. The pending
    major medical facility lease projects will replace, expand, or create
    new outpatient clinics and research facilities and are critical for
    providing access for Veterans and enhancing our research capabilities
    nationwide. The 2017 Budget includes a request to authorize six
    additional replacement major medical facility leases under VA's
    authority in 38 U.S.C. Sec. Sec. 8103 and 8104 and with the anticipated
    delegation of leasing authority from the General Services
    Administration. The Department is awaiting authorization of its request
    to expand the definition of ``Medical Facilities'' in VA's authorizing
    statutes to allow VA to more easily partner with other Federal
    agencies. Another proposal that deserves attention is authorization of
    enhanced use lease (EUL) authority to encompass broader possibilities
    for mixed-use projects. This change would give VA more opportunities to
    engage the private sector, local governments, and community partners by
    allowing VA to use underutilized property that would benefit Veterans
    and VA's mission and operations.
    Major Construction
        The 2017 Budget requests $528.1 million for Major Construction. The
    request includes funds to address seismic problems in facilities in
    Long Beach, California, and Reno, Nevada. These projects will correct
    critical safety and seismic deficiencies that pose a risk to Veterans,
    VA staff, and the public. Consistent with Public Law 114-58, the
    Department must identify a non-VA entity to execute these two projects,
    as they are more than $100 million. We have identified the U.S. Army
    Corps of Engineers as our construction agent to execute these projects.
        We must prevent the devastation and potential loss of life that may
    occur because our facilities are vulnerable to earthquakes--such as the
    one that occurred in 1971 in San Fernando, California. As shown, a 6.5-
    magnitude earthquake caused two buildings in the San Fernando Medical
    Center to collapse and 46 patients and staff to lose their lives.

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                   San Fernando Medical Center collapse, 1971

        These images show a known seismic deficiency at the San Francisco
    Medical Center--built in 1933--wherein the rebar does not extend into
    the ``pile cap.''

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                   San Fernando Medical Center collapse, 1971

        The request also includes funding for new national cemeteries in
    western New York and southern Colorado, and national cemetery
    expansions in Jacksonville, Florida and South Florida. These cemetery
    projects support NCA's goal to ensure that eligible Veterans have
    access to a burial option within a reasonable distance from their
    residences.
         The new western New York national cemetery will establish
    a dignified burial option for more than 96,000 Veterans plus eligible
    family members in the western New York region.
         The new southern Colorado national cemetery will establish
    a dignified burial option for more than 95,000 Veterans plus eligible
    family members in the southern Colorado region.
         The Jacksonville National Cemetery expansion will develop
    approximately 30 acres of undeveloped land to provide approximately
    20,200 gravesites.
         The South Florida National Cemetery expansion will develop
    approximately 25 acres of undeveloped land to provide approximately
    21,750 gravesites.
    Minor Construction
        In 2017, the Budget requests $372 million for Minor Construction.
    The requested amount would provide funding for ongoing projects that
    renovate, expand and improve VA facilities, while increasing access for
    our Veterans. Examples of projects include enhancing women's health
    programs; providing additional domiciliaries to further address
    Veterans' homelessness; improving safety; mitigating seismic
    deficiencies; transforming facilities to be more Veteran-centric;
    enhancing patient privacy; and enhancing research capabilities.
        The Minor Construction request will also provide funding for
    gravesite expansion and columbaria projects to keep existing national
    cemeteries open, and will support NCA's urban and rural initiatives. It
    will also provide funding for projects at VBA regional offices
    nationwide and will fund infrastructure repairs and enhancements to
    improve operations for the Department's staff offices.
    Leasing
        The 2017 Budget includes a request to authorize six replacement
    major medical facility leases located in Corpus Christi, Texas;
    Jacksonville, Florida; Pontiac, Michigan; Rochester, New York; Tampa,
    Florida; and Terre Haute, Indiana. These leases will allow VA to
    provide continued access to Veterans that are served in these
    locations.
                              MyVA Transformation
        MyVA puts Veterans in control of how, when, and where they wish to
    be served. It is a catalyst to make VA a world-class service provider--
    a framework for modernizing VA's culture, processes, and capabilities
    to put the needs, expectations, and interests of Veterans and their
    families first. A Veteran walking into any VA facility should have a
    consistent, high-quality experience.
        MyVA will buildupon existing strengths to promote an environment
    where VA employees see themselves as members of one enterprise,
    fortified by our diverse backgrounds, skills, and abilities. Moreover,
    every VA employee--doctor, rater, claims processor, custodian, or
    support staffer, or the Secretary of Veterans Affairs--will understand
    how they fit into the bigger picture of providing Veteran benefits and
    services. VA, of course, must also be a good steward of public
    resources. Citizens and taxpayers should expect to see efficiency in
    how we run our internal operations.

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        The FY 2017 budget will make investments toward the five critical
    MyVA objectives:

        1. Improving the Veteran experience: At a bare minimum, every
    contact between Veterans and VA should be predictable, consistent, and
    easy; however, we are aiming to make each touchpoint exceptional. It
    begins with receptionists who are pleasant to our Veteran clients, but
    there is also a science to this experience. We are focusing on human-
    centered design, process mapping, and working with leading design firms
    to learn and use the technology associated with improving every
    interaction with clients.
        2. Improving the employee experience--so we can better serve
    Veterans: VA employees are the face of VA. They provide care,
    information, and access to earned benefits. They serve with distinction
    daily. We cannot make things better for Veterans without improving the
    work experience of our dedicated employees. We must train them. We must
    move from a rules/fear-based culture to a principles/values-based
    culture. I learned in the private sector that it is absolutely not a
    coincidence that the very best customer-service organizations are
    almost always among the best places to work.
        3. Improving internal support services: We will let employees and
    leaders focus on assisting Veterans, rather than worrying about ``back
    office'' issues. We must bring our IT infrastructure into the 21st
    century. Our scheduling system, where many of our issues with access to
    care were manifest, dates to 1985. Our Financial Management System is
    written in COBOL, a language I used in 1973. This is simply
    unacceptable. It impedes all of our efforts to best serve Veterans.
        4. Establishing a culture of continuous improvement: We will apply
    Lean strategies and other performance improvement capabilities to help
    employees examine their processes in new ways and build a culture of
    continuous improvement.
        5. Enhancing strategic partnerships: Expanding our partnerships
    will allow us to extend the reach of services available for Veterans
    and their families. We must work effectively with those who bring
    capabilities and resources to help Veterans.
    Breakthrough Priorities for CY 2016
        While we have made progress, we are still on the first leg of a
    multi-year journey. We have narrowed down our near-term focus to 12
    ``breakthrough priorities.''
        Many of these reflect issues which are not new--they have been
    known problems, in some cases, for years. We have already seen some
    progress in solving many of them. However, we still have much work to
    do.

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        The following are our 12 priorities and the 2016 outcomes to which
    we aspire. We understand that it will be a challenge to accomplish all
    of these goals this year, but we have committed ourselves to producing
    results for Veterans and creating irreversible momentum to continue the
    transformation in future years.
                             Veteran Facing Goals:
    1. Improve the Veteran Experience.
         Breakthrough Outcome for 2016:

            - Strengthen the trust in VA to fulfill our country's
            commitment to Veterans; currently measured at 47 percent, we
            want it to be 70 percent by year end.
            - Establish a Department-wide customer experience measurement
            framework to enable data-driven service improvements.
            - Make the Veterans Experience office fully operational.
            - Expand the network of Community Veteran Engagement Boards to
            more than 100.
            - Additionally, in order to deliver experiences to Veterans
            that are effective, easy, and in which Veterans feel valued,
            medical centers will ensure that they are fully staffed at the
            frontline with well-prepared employees who have been selected
            for their customer service. Functionally, this means new
            frontline staff will be assessed through a common set of
            customer service criteria, hired within 30 days of selection,
            and provided a nationally standardized onboarding and training
            program.
    2. Increase Access to Health Care.
         Breakthrough Outcome for 2016:

            - When Veterans call or visit primary care facilities at a VA
            Medical Center, their clinical needs will be addressed the same
            day.
            - When Veterans call for a new mental health appointment, they
            receive a suicide risk assessment and immediate care if needed.
            Veterans already engaged in mental health care identifying a
            need for urgent attention will speak with a provider the same
            day.
            - Utilizing existing VistA technology, Veterans will be able to
            conveniently get medically necessary care, referrals, and
            information from any VA Medical Center, in addition to the
            facility where they typically receive their care.
    3. Improve Community Care.
         Breakthrough Outcome for 2016: Improve the Veterans'
    experience with Care in the Community. Following enactment of our
    requested legislation, by the end of the year:

            - VA will begin to consolidate and streamline its non-
            Department Provider Network and improve relationships with
            community providers and core partners.
            - Veterans will be able to see a community provider within 30
            days of their referral.
            - Non-Department claims will be processed and paid within 30
            days, 85 percent of the time.
            - Health care claims backlog will be reduced to less than 10
            percent of total inventory.
            - Referral and authorization time will be reduced.
    4. Deliver a Unified Veteran Experience.
         Breakthrough Outcome for 2016:

            - Vets.gov will be able to provide Veterans, their families,
            and caregivers with a single, easy-to use, and high-performing
            digital platform to access the VA benefits and services they
            have earned.
            - Vets.gov will be data-driven and designed such that the top
            100 search terms will be available within one click from search
            results. The top 100 search terms will all be addressed within
            one click on the site.
            - All current content, features and forms from the current
            public-facing VA websites will be redesigned, rewritten in
            plain language, and migrated to Vets.gov, in priority order
            based on Veteran demand.
            - Additionally, we will have one authoritative source of
            customer data; eliminating the disparate streams of
            Administration-specific data that require Veterans to replicate
            inputs.
    5. Modernize our Contact Centers (Including Veterans Crisis Line).
         Breakthrough Outcome for 2016:

            - Veterans will have a single toll free phone number to access
            the VA Contact Centers, know where to call to get their
            questions answered, receive prompt service and accurate
            answers, and be treated with kindness and respect. VA will do
            this by establishing the initial conditions necessary for an
            integrated system of customer contact centers.
            - By the end of this year, every Veteran in crisis will have
            his or her call promptly answered by an experienced responder
            at the Veterans Crisis Line.
    6. Improve the Compensation & Pension (C&P) Exam Process.
         Breakthrough Outcome for 2016:

            - Improved Veteran satisfaction with the C&P Exam process. We
            have a baseline satisfaction metric in place and have
            established a goal for significant improvement.
            - VA will have a national rollout of initiatives to ensure the
            experience is standardized across the Nation.
    7. Develop a Simplified Appeal Process.
         Breakthrough Outcome for 2016:

            - Subject to successful legislative action, put in place a
            simplified appeals process, enabling the Department to resolve
            90 percent of appeals within one year of filing by 2021.
            - Increase current appeals production to more rapidly reduce
            the existing appeals inventory.
    8. Continue Progress in Reducing Veteran Homelessness.
         Breakthrough Outcome for 2016:

            - Continue progress toward an effective end to Veteran
            homelessness by permanently housing or preventing homelessness
            for an additional 100,000 Veterans and their family members,
                           VA Internal Facing Goals:
    9. Improve the Employee Experience (Including Leadership Development).
         Breakthrough Outcome for 2016:

            - Continue to improve the employee experience by developing
            engaged leaders at all levels who inspire and empower all
            employees to deliver a seamless, integrated, and responsive VA
            customer service experience.
            - More than 12,000 engaged leaders skilled in applying LDL
            principles, concepts, and tools will work projects and/or
            initiatives to make VA a more effective and efficient
            organization.
            - Improve VA's employee experience by incorporating LDL
            principles into VA's leadership and supervisor development
            programs and courses of instruction.
            - VA Senior Executive performance plans will include an element
            that targets how to improve employee engagement and customer
            service, and all VA employees will have a customer service
            standard in their performance plans.
            - All VA supervisors will have a customer service standard in
            their performance plans.
            - VA will begin moving from paper-based individual development
            plans to a new electronic version, making it easier for both
            supervisors and employees.
    10. Staff Critical Positions.
         Breakthrough Outcome for 2016:

            - Achieve significantly improved critical staffing levels that
            balance access and clinical productivity, with targets of 95
            percent of Medical Center Director positions filled with
            permanent appointments (not acting) and 90 percent of other
            critical shortages addressed--management as well as clinical.
            - Work to reduce ``time to fill'' hiring standards by 30
            percent.
    11. Transformation the Office of Information & Technology (OIT).
         Breakthrough Outcome for 2016: Achieve the following key
    milestones on the path to creating a world-class IT organization that
    improves the support to business partners and Veterans.
            - Begin measuring IT projects based on end product delivery,
            starting with a near-term goal to complete 50 percent of
            projects on time and on budget.
            - Stand up an account management office.
            - Develop portfolios for all Administrations.
            - Tie all supervisors' and executives' performance goals to
            strategic goals.
            - Close all current cybersecurity weaknesses.
            - Develop a holistic Veteran data management strategy.
            - Implement a quality and compliance office.
            - Deploy a transformational vendor management strategy.
            - Ensure implementation of key initiatives to improve access to
            care.
            - Establish one authoritative source for Veteran contact
            information, military service history, and Veteran status.
            - Finalize the Congressionally mandated DOD/VA Interoperability
            requirements.
    12. Transform Supply Chain.
         Breakthrough Outcome for 2016:

            - Build an enterprise-wide integrated Medical-Surgical supply
            chain that leverages VA's scale to drive an increase in
            responsiveness and a reduction in operating costs. More than
            $150 million in cost avoidance will be redirected to priority
            Veteran programs.

        We are rigorously managing each of these ``breakthrough
    priorities'' by instituting a Department level scorecard, metrics, and
    tracking system. Each priority has an accountable and responsible
    official and a cross-functional, cross-Department team in support. Each
    team meets every other week in person with either the Secretary or
    Deputy Secretary to discuss progress, identify roadblocks, and problem
    solve solutions. This is a new VA--more transparent, collaborative, and
    respectful; less formal and bureaucratic; more execution and outcome-
    focused; principles based, not rules-based.
                             legislative priorities
        The Department is grateful for your continuing support of Veterans
    and appreciates your efforts to pass legislation enabling VA to provide
    Veterans with the high-quality care they have earned and deserve. We
    have identified a number of necessary legislative items that require
    action by Congress in order to best serve Veterans going forward:

        1. Improve Care in the Community: We need your help, as discussed
    on many occasions, to help overhaul our Care in the Community programs.
    VA staff and subject matter experts have communicated regularly with
    congressional staff to discuss concepts and concerns as we shape the
    future plan and recommendations. We believe that together we can
    accomplish legislative changes to streamline Care in the Community
    programs before the end of this session of Congress.
        2. Flexible Budget Authority: We need flexible budget authority to
    avoid artificial restrictions that impede our delivery of care and
    benefits to Veterans. Currently, there are more than 70 line items in
    VA's budget that dedicate funds to a specific purpose without adequate
    flexibility to provide the best service to Veterans. These include
    limitations within the same general areas, such as health care funds
    that cannot be spent on health care needs. These restrictions limit
    VA's ability to deliver Veteran care and benefits based on demand,
    rather than specific funding lines. The 2017 Budget proposes language
    to provide VA with new authority to transfer up to two percent of the
    discretionary appropriations for fiscal year 2017 between any of VA's
    discretionary appropriations accounts. This new authority would give VA
    greater ability to address emerging needs and overcome artificial
    funding restrictions on providing Veterans' care and benefits.
        3. Support for the Purchased Health Care Streamlining and
    Modernization Act: This legislation would clarify VA's ability to
    contract with providers in the community on an individual basis,
    outside of Federal Acquisition Regulations (FAR), without forcing
    providers to meet excessive compliance burdens, while maintaining
    essential worker protections. The proposal allows this option only when
    care directly from VA or from a non-VA provider with a FAR-based
    agreement in place is not feasibly available. Already, we have seen
    certain nursing homes not renew their agreements with VA because of the
    excessive compliance burdens, and as a result, Veterans are forced to
    find new nursing home facilities for residence.
        VA further requests your support for our efforts to recruit and
    retain the very best clinical professionals. These include, for
    example, flexibility for the Federal work period requirement, which is
    inconsistent with private sector medicine, and special pay authority to
    help VA recruit and retain the best talent possible to lead our
    hospitals and health care networks.
        4. Special Legislation for VA's West Los Angeles Campus: VA has
    requested legislation to provide enhanced use leasing authority that is
    necessary to implement the Master Plan for our West Los Angeles Campus.
    That plan represents a significant and positive step for Veterans in
    the Greater West Los Angeles area, especially those who are most in
    need. We appreciate the Committee's hearing in December 2015 on
    legislation to implement that Master Plan, and VA urges your support
    for expedited consideration of this bill to secure enactment of it in
    this session of Congress. Enactment of the legislation will allow us to
    move forward and get positive results for the area's Veterans after
    years of debate in the community and court action. This bill would
    reflect the settlement of that litigation, and truly be a win-win for
    Veterans and the community. I believe this is a game-changing piece of
    legislation as it highlights the opportunities that are possible when
    VA works in partnership with the community.
        5. Overhaul the Claims Appeals Process: As mentioned earlier, VA
    needs legislation that sets out structural reforms that will allow VBA
    and the Board to provide Veterans with the timely, fair, and quality
    appeals decisions they deserve thereby addressing the growing inventory
    of appeals.

        Last, let me again remind everyone that the vast majority of VA
    employees are hard workers who do the right thing for Veterans every
    day. However, we need your assistance in supporting the cultural change
    we are trying to drive. We are working to change the culture of VA from
    one of rules, fear, and reprisals to one of principles, hope, and
    gratitude. We need all stakeholders in this transformation to embrace
    this cultural transformation, including Congress. In fact, I think
    Congress, above all, recognizes the policy window we have at hand and
    must have the courage to make the type of changes it is asking VA and
    our employees to make. Congress can only put Veterans first by caring
    for those who serve Veterans.
        Our dedicated VA employees, if given the right tools, training, and
    support, can and go out of their way to provide the best care possible
    to our Veterans and their families.
                                    closing
        VA exists to serve Veterans. We have spent the last year and a half
    working to find new and better ways to provide high quality care and
    administer benefits effectively and efficiently through responsible use
    of taxpayer dollars. We will continue to face enormous challenges, and
    this budget request will provide the resources needed to continue the
    transformation of this Department.
        This budget and associated legislative proposals will allow us to
    streamline care for Veterans and improve access by addressing existing
    gaps, develop a simplified appeals process, further the progress we
    have made to eliminate the VBA claims backlog and end Veteran
    homelessness, and improve our cyber security posture to protect Veteran
    and employee data. It will also allow us to continue implementing MyVA
    to guide overall improvements to VA's culture, processes, and
    capabilities.
        I have pledged that VA will ensure that the funds Congress
    appropriates to VA will be used to improve both the quality of life for
    Veterans and the efficiency of our operations. I am proud to continue
    this work and recognize there is much left to be done. We have made
    great strides and are grateful for the support of Congress through this
    transformation.

        Thank you for the opportunity to appear before you today and for
    your continued steadfast support of Veterans. We look forward to your
    questions.
                                     ______

     Response to Prehearing Questions Submitted by Hon. Johnny Isakson to
                    the U.S. Department of Veterans Affairs
        Question 1.  Women veteran gender-specific health care increased
    $40.4 million between fiscal years 2016 and 2017. Please break out the
    amount allocated to each category included under gender-specific health
    care for fiscal year 2016 as well as projections for fiscal year 2017.
        Please see attached.

                                     Sub Categories of Women's Gender Specific Care
    ----------------------------------------------------------------------------------------------------------------
                                                                                                      $         %
                                                                  FY 2015    FY 2016    FY 2017   Increase  Increase
    ----------------------------------------------------------------------------------------------------------------
    Genitourinary Care.........................................   $155,805   $167,175   $180,943   $13,768     7.6%
    Neoplasms..................................................    $76,458    $82,550    $90,313    $7,763     8.6%
    Osteoporosis...............................................    $13,330    $14,352    $15,686    $1,334     8.5%
    Pregnancy and Childbirth...................................    $73,138    $82,986    $94,041   $11,055    11.8%
    Women's Clinics............................................   $120,095   $127,953   $134,405    $6,452     4.8%
                                                                ----------------------------------------------------
      Subtotal.................................................   $438,825   $475,016   $515,387   $40,371
    ----------------------------------------------------------------------------------------------------------------

                              Percent of Gender Specific Care Provided through non-VA care
    ----------------------------------------------------------------------------------------------------------------
                                                            FY 2015    FY 2016    FY 2017
    ----------------------------------------------------------------------------------------------------------------
    Genitourinary Care...................................        14%        15%        15%
    Neoplasms............................................        42%        43%        44%
    Osteoporosis.........................................        16%        17%        19%
    Pregnancy and Childbirth.............................        72%        73%        73%
    Women's Clinics......................................         0%         0%         0%
    ----------------------------------------------------------------------------------------------------------------

                             Days from Birth to last service provided in VHA or non-VA care
    ----------------------------------------------------------------------------------------------------------------
                                                            FY 2015    FY 2016    FY 2017
    ----------------------------------------------------------------------------------------------------------------
    Neonates.............................................       9.74       9.74       9.74
    ----------------------------------------------------------------------------------------------------------------

        Question 2.  What percentage of women veteran specific care is
    provided at Department of Veterans Affairs (VA) facilities and what
    percentage is provided through non-VA care? Please break out each
    category included under gender-specific health care for fiscal year
    2016 as well as projections for fiscal year 2017.
        Response. Below are the disbursements for the following categories
    of women Veteran specific care as of February 13, 2016 as well as
    projections for the remainder of FY 2016 and FY 2017.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Question 3.  Please detail the total number of medical centers that
    have a gynecologist on staff and whether they are full-time, part-time,
    or contracted. Please provide a break out of facilities and their
    surgical complexity.
        Response. As of February 11, 2016, there are 80 health care systems
    with at least one full-time or part-time gynecologist on staff. A
    listing of all Inpatient and Ambulatory VHA surgery programs and their
    operative complexity designations is below, and available on the
    internet at the following web site http://www.va.gov/health/surgery/

    ------------------------------------------------------------------------
                                         Veterans
                                        Integrated
      VHA Surgical Program Location      Service       Operative Complexity
                                         Network           Designation
                                          (VISN)
    ------------------------------------------------------------------------
    Anchorage, AK...................  20             Ambulatory-Basic
    Birmingham, AL..................  7              Complex
    Montgomery, AL..................  7              Standard
    Fayetteville, AR................  16             Intermediate
    Little Rock, AR.................  16             Complex
    Phoenix, AZ.....................  18             Complex
    Tucson, AZ......................  18             Complex
    Fresno, CA......................  21             Intermediate
    Martinez, CA....................  21             Ambulatory-Advanced
    Sacramento, CA..................  21             Complex
    Palo Alto, CA...................  21             Complex
    San Francisco, CA...............  21             Complex
    Loma Linda, CA..................  22             Complex
    Long Beach, CA..................  22             Complex
    San Diego, CA...................  22             Complex
    West Los Angeles, CA............  22             Complex
    Denver, CO......................  19             Complex
    Grand Junction, CO..............  19             Standard
    West Haven, CT..................  1              Complex
    Washington, DC..................  5              Complex
    Wilmington, DE..................  4              Intermediate
    Bay Pines, FL...................  8              Complex
    Cape Coral, FL..................  8              Ambulatory-Basic
    Gainesville, FL.................  8              Complex
    Jacksonville, FL................  8              Ambulatory-Basic
    Lake City, FL...................  8              Ambulatory-Advanced
    Miami, FL.......................  8              Complex
    Lake Baldwin, FL................  8              Ambulatory-Advanced
    Tampa, FL.......................  8              Complex
    Viera, FL.......................  8              Ambulatory-Basic
    West Palm Beach, FL.............  8              Intermediate
    Augusta, GA.....................  7              Complex
    Atlanta, GA.....................  7              Complex
    Dublin, GA......................  7              Standard
    Des Moines, IA..................  23             Intermediate
    Iowa City, IA...................  23             Complex
    Boise, ID.......................  20             Intermediate
    Danville, IL....................  11             Ambulatory-Basic
    Chicago-Jesse Brown, IL.........  12             Complex
    Hines, IL.......................  12             Complex
    North Chicago, IL...............  12             Intermediate
    Marion, IL......................  15             Standard
    Evansville, IN..................  15             Ambulatory-Basic
    Fort Wayne, IN..................  11             Standard
    Indianapolis, IN................  11             Complex
    Leavenworth, KS.................  15             Intermediate
    Topeka, KS......................  15             Standard
    Wichita, KS.....................  15             Intermediate
    Lexington, KY...................  9              Complex
    Louisville, KY..................  9              Complex
    New Orleans, LA.................  16             Ambulatory-Advanced
    Pineville, LA...................  16             Ambulatory-Advanced
    Shreveport, LA..................  16             Complex
    Boston-Jamaica Plain, MA........  1              Ambulatory-Advanced
    West Roxbury, MA................  1              Complex
    Baltimore, MD...................  5              Complex
    Togus, ME.......................  1              Intermediate
    Ann Arbor, MI...................  11             Complex
    Detroit, MI.....................  11             Complex
    Saginaw, MI.....................  11             Ambulatory-Basic
    Iron Mountain, MI...............  12             Ambulatory-Basic
    Minneapolis, MN.................  23             Complex
    St. Cloud, MN...................  23             Ambulatory-Basic
    Columbia, MO....................  15             Complex
    Kansas City, MO.................  15             Complex
    St. Louis, MO...................  15             Complex
    Biloxi, MS......................  16             Intermediate
    Jackson, MS.....................  16             Complex
    Billings, MT....................  19             Ambulatory-Basic
    Fort Harrison, MT...............  19             Intermediate
    Asheville, NC...................  6              Complex
    Durham, NC......................  6              Complex
    Fayetteville, NC................  6              Standard
    Salisbury, NC...................  6              Intermediate
    Fargo, ND.......................  23             Intermediate
    Omaha, NE.......................  23             Complex
    Manchester, NH..................  1              Ambulatory-Basic
    East Orange, NJ.................  3              Complex
    Albuquerque, NM.................  18             Complex
    Reno, NV........................  21             Intermediate
    Las Vegas, NV...................  22             Intermediate
    Albany, NY......................  2              Complex
    Buffalo, NY.....................  2              Complex
    Syracuse, NY....................  2              Complex
    Bronx, NY.......................  3              Complex
    Brooklyn, NY....................  3              Complex
    Northport, NY...................  3              Complex
    New York, NY....................  3              Complex
    Cincinnati, OH..................  10             Complex
    Cleveland-ASC, OH...............  10             Ambulatory-Basic
    Cleveland, OH...................  10             Complex
    Columbus, OH....................  10             Ambulatory-Advanced
    Dayton, OH......................  10             Intermediate
    Muskogee, OK....................  16             Intermediate
    Oklahoma City, OK...............  16             Complex
    Portland, OR....................  20             Complex
    Roseburg, OR....................  20             Ambulatory-Basic
    Erie, PA........................  4              Ambulatory-Advanced
    Lebanon, PA.....................  4              Intermediate
    Philadelphia, PA................  4              Complex
    Pittsburgh, PA..................  4              Complex
    Wilkes-Barre, PA................  4              Intermediate
    San Juan, PR....................  8              Complex
    Providence, RI..................  1              Intermediate
    Charleston, SC..................  7              Complex
    Columbia, SC....................  7              Intermediate
    Fort Meade, SD..................  23             Standard
    Hot Springs, SD.................  23             Ambulatory-Basic
    Sioux Falls, SD.................  23             Intermediate
    Memphis, TN.....................  9              Complex
    Mountain Home, TN...............  9              Intermediate
    Murfreesboro, TN................  9              Ambulatory-Advanced
    Nashville, TN...................  9              Complex
    Houston, TX.....................  16             Complex
    Dallas, TX......................  17             Complex
    Harlingen, TX...................  17             Ambulatory-Basic
    San Antonio, TX.................  17             Complex
    Temple, TX......................  17             Complex
    Amarillo, TX....................  18             Intermediate
    El Paso, TX.....................  18             Ambulatory-Basic
    Salt Lake City, UT..............  19             Complex
    Clarksburg, WV..................  4              Intermediate
    Hampton, VA.....................  6              Intermediate
    Richmond, VA....................  6              Complex
    Salem, VA.......................  6              Intermediate
    White River Junction, VT........  1              Intermediate
    Seattle, WA.....................  20             Complex
    Spokane, WA.....................  20             Standard
    Tacoma, WA......................  20             Ambulatory-Basic
    Green Bay, WI...................  12             Ambulatory-Basic
    Madison, WI.....................  12             Complex
    Milwaukee, WI...................  12             Complex
    Martinsburg, WV.................  5              Intermediate
    Beckley, WV.....................  6              Standard
    Huntington, WV..................  9              Complex
    Cheyenne, WY....................  19             Standard
    ------------------------------------------------------------------------

                        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                        Facility Gynecologists Raw Data

                        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Question 4.  Current law allows VA to cover care for newborns of
    eligible women veterans for the first seven days after birth. Please
    provide a break out of the average number of days VA has covered care
    for newborns in fiscal years 2014, 2015, and 2016, and projections for
    fiscal year 2017.
        Response. Listed in the table below is the average number of days
    the VA has covered for newborn care since FY 2014. These averages are
    consistent with the number of days the newborn was actually
    hospitalized.

    ------------------------------------------------------------------------
                      FY                           Average Auth Days
    ------------------------------------------------------------------------
    2014.................................  2.8
    2015.................................  3.0
    2016.................................  3.2
    2017 (Projected).....................  3.4
    ------------------------------------------------------------------------

        Question 5.  In the fiscal year 2017 budget request, the Veterans
    Health Administration (VHA) will create the VHA Transitional Care
    Program Office ``to develop and manage policies, procedures and
    performance metrics related to VHA transitional care.''
        A. How many full-time equivalent employees will be dedicated to
    this office for fiscal years 2017 and 2018?
        B. How much budgetary resources will be dedicated to this new
    office for fiscal years 2017 and 2018?
        C. Please detail the duties of this new office, including to whom
    the office will report.
        Response. The VHA Transitional Care Program Office is an
    aspirational project for the future. However, there is no specific
    resource or budget request for it at this time.

        Question 6.  The fiscal year 2017 budget request indicates that VA
    overestimated by $1.8 billion the obligations for fiscal year 2015
    ``because the obligations did not have sufficient supporting
    documents'' and specifies VA would continue to identify the
    appropriations account and issue corrective actions.
        A. Has VA identified the appropriations account? If so, please
    provide a detailed explanation of what caused the overestimate.
        Response. Our financial audit identified that VA appropriations
    were possibly overstated by $1.8 billion in obligations due to the lack
    of supporting documentation. The FY 2015 financial audit required that
    an adjustment be made, but the audit did not indicate which specific
    appropriation account should be adjusted.
        Most of the likely overestimate occurred due to a lack of the
    subsidiary system for Purchased Care not being directly interfaced/or
    reconciled to the main accounting system. Other overestimates occurred
    in other programs due to a lack of a robust review of obligation
    balances.

        B. What corrective actions has VA taken in this matter?
        Response. VA has begun implementing a new, mandatory reconciliation
    process for FY 2016 for Purchased Care. This new reconciliation process
    was outlined as part of the Care in the Community certification process
    in a memorandum from the Acting Deputy Under Secretary for Health
    Operations and Management to all Network Directors. The subsidiary
    accounting system will be reconciled to the main accounting system on a
    monthly basis, and supporting documentation will be maintained to
    support the reconciliation process. Documentation for obligations will
    also be reviewed for reasonableness and validity as part of the
    reconciliation process to ensure the most accurate obligation balances.
        Other programs will be performing a more comprehensive review of
    obligations for FY 2016 to ensure adequate supporting documentation
    exists for all substantial obligation balances.

        Question 7.  Please provide an update on VA's agreement with the
    United States Army Corps of Engineers (USACE) to manage the seven major
    construction projects identified in Public Law 114-113, the
    Consolidated Appropriations Act of 2016, and VA's plan to ensure all
    future new medical facilities with a cost of $100 million or greater
    are managed by USACE.
        Response. VA has established a master Inter-Agency Agreement (IAA)
    with the U.S. Army Corps of Engineers (USACE) which was signed on
    July 14, 2015. The scope of that IAA requires USACE to provide
    planning, acquisition, design, engineering, and construction management
    services and related work, including all levels of contracting,
    planning and project management support as defined by CFM for VA's
    ``super construction projects'' (projects over $100 million). IAA
    orders can be issued to the USACE for Exploratory, Design, and
    Construction requirements. To date, there are seven projects that are
    partnered with USACE through an IAA Task Order, or are in the process
    of entering the initial task order phase. To ensure that all future
    partnered projects are effectively managed, CFM and USACE are jointly
    developing an Enterprise Program Management Plan that will provide a
    framework and consistent approach to managing these projects. A Senior
    Executive Review Group consisting of CFM and USACE participants is
    scheduled, and this meeting will allow the participants to further
    define the partnership and to ensure alignment of all teams in our
    joint effort to ensure on time, on schedule and within budget project
    execution.

        Question 8.  The budget indicates that VA expects to fund 328
    Caregiver Support Coordinators in 2016. Does the fiscal year 2017
    budget request include an increase in Caregiver Support Coordinators?
        Response. Yes. The budget request does include an increase in
    staffing for the Caregiver Support Program. VA expects to fund 400
    Caregiver Support Coordinators in FY 2017, an additional 72 positions.

        Question 9.  Despite a projected decrease in the number of veterans
    to be served by the Grant and Per Diem Program, the fiscal year 2017
    budget request represents an increase from fiscal year 2016. Is this
    solely based on the expected increase of the per diem rate, or are
    there other factors contributing to the increase? If so, please list
    the factors.
        Response. The FY 2017 budget request for the Grant and Per Diem
    (GPD) program restores program funding at the fully authorized level.
    Even though the demand for GPD transitional housing beds is expected to
    decrease over time, the program still plays a vital role in the
    continuum of homeless services; providing supportive services to those
    Veterans who would otherwise be among the unsheltered homeless
    population, and ultimately transitioning to permanent housing. GPD
    funded providers have not had an increase in the per diem rate since
    December 2013; therefore, per diem costs for the program are
    anticipated to rise overall for operational programs as the nightly
    cost for per diem increases in the community.
        VA and its Federal partners are promoting the use GPD to support an
    operational model of transitional housing as bridge housing. Bridge
    housing, is defined as transitional housing used as a short-term stay
    when a Veteran has been offered and accepted a permanent housing
    intervention (e.g., Supportive Services for Veteran Families (SSVF),
    Department of Housing and Urban Development-VA Supportive Housing (HUD-
    VASH), etc.) but is not able to immediately enter the permanent
    housing. Veterans accessing bridge housing would otherwise be street
    homeless; therefore, this model is an opportunity to provide safe,
    secure structured environment for these Veterans while they secure
    permanent housing. It is anticipated that the use of this model will
    increase the overall utilization of GPD funded projects.

        Question 10.  The 2015 point-in-time count indicated a 4 percent
    decline in veteran homelessness from 2014, and a 36 percent decline
    since 2009. Despite this decline, the fiscal year 2017 budget request
    for programs to prevent and end veteran homelessness represents an
    increase between fiscal years 2015 and 2016. Please explain, in detail,
    the reason for the funding increase at a time when homelessness is
    declining.
        Response. The fiscal year (FY) 2017 budget supports VA's commitment
    to ending Veteran homelessness by emphasizing rescue for those who are
    homeless today, and prevention for those at risk of homelessness. The
    FY 2017 budget requests $1.6 billion for VA homeless-related programs,
    including case management support for HUD-VASH, GPD, and SSVF.
        The requested increase in the FY 2017 VA homeless-services budget
    request is needed to support the $60 million in HUD-VASH vouchers that
    were appropriated to HUD in FY 2016. VA was not appropriated
    corresponding funding for case management. It is estimated that
    approximately 300 additional full-time equivalent employees will be
    required to support the Veterans who receive these vouchers. It is
    expected that approximately 85,000 HUD-VASH vouchers will be in use by
    the end of FY 2017. The increase in the GPD program budget request for
    FY 2017 restores the program to its fully authorized level.
        The kind of progress reflected in the declining Point-in-Time
    estimates affirms that the strategies and systems that VA has
    implemented are working. Additionally, VA has made unprecedented
    efforts to promote the services available to Veterans who are homeless
    or might become homeless. As a result of the success of the effort and
    targeted resources, more Veterans are seeking out the VA more than ever
    before. Since 2010, demand for VA homeless-related services has
    increased by 136 percent (FY 2010: 127,070--FY 2015: 300,108 Unique
    Veterans accessing VHA homeless services). There has been an 8.5
    percent increased demand for homeless services since this time last
    year (January 2015: 164,224; January 2016: 178,139). Communities that
    have reached the goal or are close to effectively ending homelessness
    rely heavily on VA targeted homeless resources. Communities that have
    developed a sustainment plan are dependent on those resources to remain
    available as they continue to tackle homelessness.
        Until we have an economy that benefits everyone, Veterans will
    still have housing crises and some will become homelessness. The
    systems we have in place will make sure that the experience is measured
    not in months or years, but in days if sustained. Therefore, VA remains
    focused on ensuring adequate resources that address the needs of
    Veterans who may become or are at-risk of homelessness and sustains the
    support for Veterans who have moved into permanent housing so that they
    maintain housing stability and do not fall back into homelessness.

        Question 11.  The fiscal year 2017 budget request includes this
    legislative proposal:
    Clarify Evidentiary Threshold at Which VA is Required to Provide a
            Medical Examination
        This proposal seeks to amend 38 U.S.C. Sec. 5103A(d) to clarify the
    evidentiary threshold for which VA, under its duty to assist
    obligation, is required to request a medical examination for
    compensation claims. This amendment would clarify section 5103A(d)(2)
    to require, prior to providing a medical exam, the existence of
    objective evidence establishing that the Veteran experienced an event,
    injury, or disease during military service. VA would still consider lay
    evidence as sufficient to show a current disability or persistent
    symptoms of a disability. However, except in special circumstances,
    objective evidence such as medical records, service records, accident
    reports, etc., must also be of record to trigger an exam. Benefit
    savings to the Compensation and Pensions account are estimated to be
    $120.1 million in 2017, $124.9 million in 2018, and $650.3 million over
    5 years and $1.4 billion over 10 years.
        A. Please provide the Senate Committee on Veterans' Affairs
    (Committee) with a breakdown of the savings expected from this proposal
    and the underlying assumptions used to calculate the expected cost
    savings, such as the expected reduction in the number of examinations
    that would be provided by VA each year and the expected impact on
    awards of compensation.
        Response. Requiring the existence of objective evidence
    establishing that the Veteran experienced an event, injury, or disease
    during military service prior to providing a medical exam is estimated
    to save $120.1 million in FY 2017, $650.3 million over five years, and
    $1.4 billion over 10 years.
        VA estimates approximately 505,478 disability exams will be
    conducted in FY 2017, and approximately 30 percent of these exams will
    result in denial of claimed conditions being associated with a
    Veteran's military service. VA assumes 113,732 exams (75 percent of
    denials) would no longer require a disability exam based on this
    proposal.
    Cost Benefit Analysis:

                           Benefit Savings (Mandatory)
    ------------------------------------------------------------------------
                                                  Caseload or      Savings
                                                    Workload   -------------
                    Fiscal Year                 ---------------
                                                      (as          ($000s)
                                                  appropriate)
    ------------------------------------------------------------------------
    2017.......................................     113,732       $120,082
    2018.......................................     113,732       $124,875
    2019.......................................     113,732       $129,860
    2020.......................................     113,732       $135,044
    2021.......................................     113,732       $140,435
                                                ----------------------------
      5-Year Total.............................     568,662       $650,296
                                                ----------------------------
    2022.......................................     113,732       $146,041
    2023.......................................     113,732       $151,872
    2024.......................................     113,732       $157,935
    2025.......................................     113,732       $164,240
    2026.......................................     113,732       $170,798
                                                ----------------------------
      10-Year Total............................   1,137,325     $1,441,182
    ------------------------------------------------------------------------

                            GOE Costs (Discretionary)
                 No GOE costs are associated with this proposal
    ------------------------------------------------------------------------
                                                 Caseload or       Savings
                                                   Workload    -------------
                   Fiscal Year                -----------------
                                                     (as           ($000s)
                                                 appropriate)
    ------------------------------------------------------------------------
    2017.....................................               0            0
    2018.....................................               0            0
    2019.....................................               0            0
    2020.....................................               0            0
    2021.....................................               0            0
                                              ------------------------------
      5-Year Total...........................               0            0
                                              ------------------------------
    2022.....................................               0            0
    2023.....................................               0            0
    2024.....................................               0            0
    2025.....................................               0            0
    2026.....................................               0            0
                                              ------------------------------
      10-Year Total..........................               0           $0
    ------------------------------------------------------------------------

    Methodology:
        Approximately 30 percent of disability exams result in denial of
    claimed conditions being associated with a Veteran's military service.
    Compensation Service assumes 75 percent of these denials would no
    longer require a disability exam based on this proposal.
        This proposal would not result in GOE savings. VBA would increase
    its administrative efficiency by redirecting resources to other
    critical claims processing.
        Compared to the estimate provided in the FY 2016 President's
    Budget, savings in this updated estimate have increased as a result of
    Section 241 of Division I, Title II, of P.L.113-235 (enacted
    December 16, 2014), which proposes to expand the number of sites where
    contract medical exams could be funded by the C&P appropriation. The
    estimated cost savings in the FY 2016 Budget was based on an estimated
    165,000 exams completed under this authority. This revised cost savings
    estimate is based on 500,000 exams completed under this authority
        In addition to the change in Pub. L. 113-235 regarding the number
    of sites authorized to utilize contract medical exams, VBA plans to
    absorb all contract medical exams previously performed under VHA
    contracts. VHA historically used contractors to complete exams it did
    not have capacity to complete through its own clinicians. Moving
    forward, any exams VHA does not have capacity to complete will be
    completed by VBA's contractors. Therefore, the revised estimate of
    500,000 exams completed under VBA's mandatory funding authority
    includes approximately 200,000 exams VHA previously planned to have
    contractors complete.
        VHA will continue to be the primary provider of disability exams
    for VA, and VHA clinicians will continue performing disability exams
    for VA at current capacity levels. Contract exams are only utilized
    when VHA exam capacity is exceeded. VA will maintain current protocols
    to ensure distribution of exam capacity that results in use of VHA
    resources before contract resources are utilized. As such, only
    contract exams will be reduced as a result of this proposal, and VHA
    funding for exams performed by VHA employees on a non-contract basis
    will not be impacted.

        Question 12.  In the fiscal year 2017 budget request, VA seeks an
    additional 300 staff to process non-rating claims work.
        A. How many staff are currently dedicated to non-rating work (other
    than appeals), how many additional staff does VA expect will be brought
    on board for that purpose during fiscal year 2016, and how many
    employees in total would perform that function in fiscal year 2017 if
    the budget request is adopted?
        Response. Currently, VBA has 1,219 staff assigned to perform non-
    rating work, which includes management, clerical, and direct-labor
    employees. This figure includes approximately 260 temporary employees
    who are assigned to work non-rating work. VBA is grateful for the
    authority to hire 320 FTE for non-rating work in FY 2016, which will
    permit conversion of its temporary employees to permanent status and
    hiring of an additional 60 FTE. VBA requested an additional 300 FTE in
    its FY 2017 budget request, which will bring our non-rating strength to
    1,579 FTE.

        B. On average, how many non-rating actions (other than appeals) are
    completed per year by individual non-rating staff, what are the
    performance targets for these employees, and how many actions per
    employee would you expect to be completed per year if funding for the
    additional staff is provided?
        Response. VBA does not budget FTE solely for rating or non-rating
    work. Production per FTE is based on all compensation and pension
    employees assigned to each regional office's claims processing
    workforce. Please see the chart below for production per FTE; in FY
    2016, compensation and pension FTE are prorated for four months to
    determine production per FTE.

    ------------------------------------------------------------------------
                                               Non-Rating Claim
                                                     and          Non-Rating
                                       FTE      Administrative    Production
                                              Actions Completed    per FTE
    ------------------------------------------------------------------------
    FY 2014........................   14,307      2,699,264           188.7
    FY 2015........................   15,121      3,112,379           205.8
    FY 2016 as of Jan. 31..........    5,130        878,208           171.2
    ------------------------------------------------------------------------

        VBA estimates the additional 320 non-rating employees will not
    substantially increase the non-rating claims output because
    approximately 260 of these employees are already performing non-rating
    work. The additional 60 FTE are estimated to complete between 9,000 and
    13,000 additional non-rating claims and administrative actions in FY
    2016. However, the number of non-rating claims completed per FTE will
    initially decrease because of the hours devoted to training new
    employees and the lower production levels of these employees due to
    their inexperience. In FY 2016 and FY 2017, VBA expects non-rating
    claim production per FTE to decrease slightly from the FY 2015 average
    of 206 non-rating claims/actions per compensation and pension FTE.
        Individual employees have a production element in their performance
    standards based on their General Schedule grade level, time in
    position, and type of work. Once fully trained, these employees will
    complete approximately 7 to 10 actions on average per day. All actions
    lead to the completion of a claim, but some claims will require
    multiple actions to fulfill legal requirements to develop for
    additional evidence or provide due process notice.

        C. How many employees are currently dedicated to handling appeals
    at the Veterans Benefits Administration, how many additional appeals
    staff does the Veterans Benefits Administration plan to bring on board
    during fiscal year 2016, and how many employees in total would perform
    that function in fiscal year 2017 if the budget request is adopted?
        Response. In FY 2015, VBA had an average of 916 employees dedicated
    to appeals and has increased staffing to 1,178 employees as of
    January 31, 2016. VBA is grateful for funding to hire 100 appeals FTE
    in FY 2015 and 200 appeals FTE in FY 2016. However, additional FTE are
    not sufficient to address the existing or future workload for appeals.
    Under current law, VA appeals framework is complex, ineffective, and
    opaque, and Veterans wait on average five years for final resolution of
    an appeal. The 2017 Budget supports the development of a Simplified
    Appeals Process to provide Veterans with a simple, fair, and
    streamlined appeals procedure in which they would receive a final
    appeals decision within 365 days from filing of an appeal by FY 2021.
    The 2017 Budget also provides funding to support over 900 FTE for the
    Board and proposes a legislative change that will improve an outdated
    and inefficient process which will benefit all Veterans through
    expediency and accuracy. We look forward to working with Congress,
    Veterans, and other stakeholders to implement improvements.

        D. On average, how many appeal-related actions are completed per
    year by individual appeals staff, what are the performance targets for
    these employees, and how many appeal-related actions per employee would
    you expect to be completed per year if funding for the additional staff
    is provided?
        Response. The complex appeal process defined in current law
    involves multiple reviews of the evidence considered in the original
    decision as well as any new evidence received during the appeal. Please
    see the chart below for VBA's total completed appeal actions (such as
    statements of the case and appeal certifications) and appeals
    productivity; in FY 2016, compensation and pension FTE are prorated for
    four months to determine production per FTE.

    ------------------------------------------------------------------------
                                               Appeal Actions      Appeals
                                     VBA FTE      Completed     Productivity
    ------------------------------------------------------------------------
    FY 2015........................    916        198,774               217
    FY 2016 as of Jan. 31..........   1178         69,084               176
    ------------------------------------------------------------------------

        Employees processing appeals are typically VBA's most experienced
    disability claims processors, which mitigates productivity losses. VBA
    expects a short-term decrease in appeals productivity as employees new
    to processing appeals become familiar with the entire process but will
    mitigate that loss by utilizing overtime to process appeals. As
    previously noted, productivity per FTE is based on all compensation and
    pension employees assigned to regional offices, not just FTE processing
    appeals.
        The performance standard for Decision Review Officers is based on
    type of work and the number of issues addressed in each decision. At
    minimum, employees will complete three appeal actions per day to
    achieve the fully successful level of performance.
        To increase efficiency, VBA is working closely with the Board of
    Veterans' Appeals, Veterans Service Organizations, and Congress to
    identify legislative solutions to simplify the appeals process and
    improve the timeliness of appeal decisions.

        Question 13.  The fiscal year 2017 budget request includes an
    increase of $46 million for the Board of Veterans' Appeals to fund an
    additional 242 employees.
        A. How long is it expected to take to hire and train 242 new
    employees?
        Response. The Board will begin the recruitment process for the 242
    additional employees immediately upon enactment of the FY 2017 budget
    in order to support execution of the funding by the end of the Fiscal
    Year. In advance of the actual job announcement, the Board is working
    with OPM on an aggressive strategic recruitment plan, to ensure
    successful execution. The 242 additional employees will primarily
    consist of staff attorneys to draft appeals decisions, with an
    appropriate complement of administrative support staff and some
    additional judges. For new attorney staff, the Board has a 6-month
    training curriculum to ensure thorough training on veterans benefits
    law. New judges will undergo rigorous initial training with follow-up
    mentoring and continuing education for both legal training and
    leadership training. Administrative staff will also undergo new
    employee training specific to their business line.

        B. What positions would be filled by those new employees?
        Response. Most of the 242 employees would be staff attorneys.
    Specifically, the goal is for 145 attorneys, 24 judges, and 73 support
    staff.

        C. What challenges would the Board of Veterans' Appeals face in
    expanding rapidly if funding for this increase in staff is approved and
    how would those challenges be handled?
        Response. Taking lessons learned from the 2013 hiring surge of 100
    attorneys in a four month timeframe, the challenges faced would include
    human resources support, information technology (IT) support, training
    support, and office space. These challenges would be handled by having
    a strong recruitment plan in place this year, in advance of the budget
    enactment, with a tiger team of dedicated personnel to handle the
    recruitment and on-boarding. The IT needs would also be identified in
    advance, with a streamlined plan to have the necessary equipment in
    place in a timely fashion as new hires were on-boarded. The training
    needs would be handled by having a strong training plan in place, using
    lessons learned from the large training in 2013, and subsequent
    trainings. Finally, the office space training would be handled by a
    combination of repurposing existing space for storing paper claims
    files, and increasing telework for eligible employees.

        D. Would the Board of Veterans' Appeals expect any short-term
    decrease in productivity if there is a large influx of new employees
    during fiscal year 2017?
        Response. Eighty-five percent of the Board's budget is allocated to
    personnel costs; therefore, a large portion of any increase in funding
    will be applied to hiring to address the Board's pending inventory of
    appeals. A direct and proportional correlation exists between the
    number of Board employees and decision output. It is likely that the
    Board will experience a decrease in productivity during the on-boarding
    and initial training period, as existing Board staff will be needed to
    focus on training the new employees as expediently as possible. While
    the Board may experience a slight dip in productivity during the
    initial new attorney training period, the Board anticipates that any
    decline will be made up once the new employees are in place and are
    fully trained. In this regard, following the FY 2013 and FY 2014 hiring
    surges during which the Board recruited and onboarded approximately 170
    additional FTE, the Board saw a short term productivity dip during the
    training period, but a subsequent overall productivity increase,
    resulting in 55,532 dispositions in FY 2014 and 55,713 dispositions in
    FY 2015.
        In 2015, each Board FTE produced approximately 86 appellate
    decisions. The Board anticipates that the number of appellate decisions
    per FTE may increase slightly with technological enhancements as the
    appeals process is modernized provided that resources and enterprise
    support are intact. However, a competing force against that increase is
    the ever changing and complex legal landscape, along with increased
    evidence-gathering and readjudication at every stage in the multi-stage
    appeals process.

        E. Please provide a break out of the non-personnel costs that would
    be incurred to bring on board those employees, such as rearranging
    office space, equipment, office supplies, or training materials.
        Response. As noted above, 85 percent of the Board's budget is
    allocated to personnel costs. The balance of funds will allow the Board
    to pay for operating costs such as rent, security, and other
    administrative requirements. See chart below for further details.

                            Board of Veterans' AppealsPSummary of Employment and Obligations
                                                 (dollars in thousands)
    ----------------------------------------------------------------------------------------------------------------
                                                                                2016                       Increase
                                                                2015   ----------------------    2017        (+)/
                                                               Actual     Budget    Current    Request   Decrease (-
                                                                         Request    Estimate                  )
    ----------------------------------------------------------------------------------------------------------------
    Average Employment.....................................        646        669        680        922       +242
    Obligations:
      Personal Services....................................     88,757     92,522     96,317    133,379    +37,062
      Travel...............................................        319        415        413        422         +9
      Transportation of Things.............................          0         80         94        129        +35
      Rents, Communications & Utilities....................      8,704      8,960      9,993     13,539     +3,546
      Printing & Reproduction..............................         40         90         94        135        +41
      Other Services.......................................      5,016      5,022      5,167      7,442     +2,275
      Supplies & Materials.................................        257        325        468        511        +43
      Equipment............................................         35        120        100        189        +89
      Insurance & Indemnities..............................          3        350        292        350        +58
                                                            --------------------------------------------------------
        Total Obligations..................................   $103,131   $107,884   $112,938   $156,096    $43,158
    Reimbursements.........................................          0          0          0          0          0
    SOY Unobligated Balance (-)............................    (7,300)          0    (3,156)          0     +3,156
    EOY Unobligated Balance (+)............................      3,349          0          0          0          0
    Transfer from Unobligated Balance (-)..................          0          0        102          0       -102
                                                            --------------------------------------------------------
        Budget Authority...................................    $99,180   $107,884   $109,884   $156,096    $46,212
    ----------------------------------------------------------------------------------------------------------------

        Question 14.  According to VA, the appeals process takes on average
    5 years between filing the appeal and receiving a decision by the Board
    of Veterans' Appeals.
        A. Of that 5-year timeframe, please provide a break out of how many
    days/months on average an appeal would be waiting for the Veterans
    Benefits Administration or the Board of Veterans' Appeals to take a
    required action on it.
        B. Of that 5-year timeframe, please provide a break out of how many
    days/months on average the Veterans Benefits Administration or the
    Board of Veterans' Appeals would be waiting for the appellant or his/
    her representative to take a required action regarding an appeal.
        Response. In FY 2015, the average appeals processing time from the
    date of filing a Notice of Disagreement (NOD) to a Board adjudication
    (including grants, denials, and remands for further development) was
    approximately 5 years (1,771 days). The attached SVAC Pre-Hearing
    Presentation captures the average processing time in days for each step
    of the multi-step appeals process, including a breakdown of VSO and
    Board time for cases completed by the Board from FY 2005 to FY 2015.
    The data include only appeals decided by the Board, not those resolved
    at earlier stages of the appeals process.
        The chart below shows what a simplified appeals process would look
    like, as well as the corresponding VBA and Board processing times by
    2021, with implementation of the legislative proposals and resources
    requested in the 2017 President's Budget for 2017 and beyond.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Question 15.  In response to questions about the fiscal year 2016
    budget request, VA indicated that, during fiscal years 2014 and 2015,
    the Veterans Benefits Administration processed compensation and pension
    claims during overtime hours but did not process appeals during
    overtime hours. VA estimates that approximately 11 to 12 percent of
    individuals receiving a decision on their claims by the regional
    offices will appeal.
        A. What percent of claims processed during overtime did the
    Veterans Benefits Administration project would generate appeals?
        Response. VBA does not separately track claims processed on
    overtime and anticipates the overall ratio of appeals received divided
    by claims completed in a year will continue to be approximately 11 to
    12 percent, which includes claims completed during overtime. The
    appeals process established by current law allows Veterans to file
    appeals up to one year following VA's notice of a final decision. As
    such, many decisions rendered during FY 2015 are still within their
    appeal period.

        B. By opting to use overtime to process claims but not a
    commensurate proportion of appeals, did the Veterans Benefits
    Administration project that the appeals inventory at the Veterans
    Benefits Administration would increase during that time? If so, please
    share those projections with the Committee.
        Response. VBA did project its appeals inventory would increase in
    FY 2015 by approximately 30 percent. This projection was based on a
    historic level of 1.4 million disability rating claims completed and
    3.1 million non-rating claims and other administrative actions
    completed. VBA implemented new performance metrics for appeals output
    and increased staffing and to address the increase in appeals
    inventory.
        However, without legislative change or significant increases in
    staffing, VA will face a soaring appeals inventory, and Veterans will
    wait even longer for a decision on their appeal. If Congress fails to
    enact VA's proposed legislation to simplify the appeals process,
    Congress would need to provide resources for VA to sustain more than
    double its appeals FTE, with approximately 5,100 appeals FTE onboard.
    The prospect of such a dramatic increase, while ignoring the need for
    structural reform, is not a good result for Veterans or taxpayers.

        Question 16.  On January 21, our Committee held a hearing on the
    MyVA transformation. This initiative detailed priorities and strategies
    for transforming how VA interacts with veterans. The budget is largely
    silent on specifics related to spending and the MyVA initiative. Please
    provide a breakdown of the following:

        A. How much VA has spent and plans to spend on implementation of
    the MyVA initiative.

    ------------------------------------------------------------------------
                                                              Actual FY 2015
    ------------------------------------------------------------------------
    Veteran Experience Stand-Up
      Veteran Experience Stand-Up Total....................   $10,236,182.62
    Support Services
      Support Services Total...............................    $4,667,037.34
    Performance Improvement
      Performance Improvement Total........................    $9,054,806.85
    Strategic Partnerships (Not funded with reimbursable
     funds)
      Strategic Partnerships...............................      $137,243.16
    MyVA Task Force PSO (Not funded with reimbursable
     funds)
      My VA Task Force PSO Total...........................   $10,005,171.00
    MyVA Total
      MyVA Total...........................................   $34,100,440.97
    ------------------------------------------------------------------------

        These costs reflect direct costs incurred by the MY VA Task Force.
    Costs associated to the 12 Breakthrough Priorities are spread
    throughout the entire department.

        B. A specific breakdown of funding sources and any areas you have
    had to divert from other resources.

                             MyVA Funding by Account
    ------------------------------------------------------------------------
          Pro Rata Share of Reimbursements            FY 15         FY 16
    ------------------------------------------------------------------------
    VHA.........................................   $31,297,500   $68,692,500
    VBA.........................................     2,434,250     5,342,750
    OIT.........................................       869,375     1,908,125
    NCA.........................................       173,875       381,625
                                                 ---------------------------
      Total.....................................   $34,775,000   $76,325,000
    ------------------------------------------------------------------------

        C. How many full-time equivalents are currently being utilized in
    the transformation and how many VA projects will be needed.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Question 17.  The budget requests almost $4.3 billion in
    information technology. One of the breakthrough priorities for the
    Secretary is that VA will complete 50 percent of information technology
    projects on time and on budget.
        What percentage of information technology projects are completed on
    time and on budget now?
        Response. The Veteran-Focused Integration Process (VIP) replaces
    the Project Management Accountability System (PMAS) for enterprise IT
    management of products and services, which VA has used since 2009 to
    oversee its IT project delivery. The move from PMAS to VIP takes a
    generational leap forward in VA's commitment to serve our Nation's
    Veterans. Using PMAS criteria (which measures work product delivery);
    VA currently has a 78% on time rate for delivering increments of work
    within IT projects.
        However, the evolution to VIP greatly expands the scope and span of
    what VA will be measuring, while reducing the paperwork requirements by
    88 percent. Under VIP, VA is re-organizing to a portfolio management
    construct focused on measuring end product delivery rather than work
    product delivery. The near-term (6-18 month) goal for VIP is targeting
    50 percent on-time and on-budget delivery, higher than the industry
    standard of 45 percent.

        Question 18.  The budget requests an additional 703 full-time
    equivalents for information technology. 599 of these employees will be
    staffing ``enterprise operations.'' Can you please provide further
    details on these projects and the specific program offices where the
    full-time equivalents will be needed?
        Response. Enterprise Operations (EO) is a computer operations and
    hosting function currently funded within the VA Franchise Fund. EO has
    been organizationally aligned within OI&T Service Delivery and
    Engineering (SDE) for several years. This realignment will not change
    OI&T budget requirements; funds that would have been transferred to the
    Franchise Fund will be directly obligated by OI&T instead.
        EO operates or contracts for the computing infrastructure for many
    of VA's software applications that directly serve Veterans, VA business
    lines that provide direct Veteran service, or internal administrative
    services. EO provides a full complement of technical solutions
    including service planning architecture, security services, service
    management, hosting, monitoring, business continuity and recovery,
    application management, and managed hosting. Most of the EO FTE that
    are organizationally aligned to SDE will be transferred to SDE for
    funding purposes. Operational management and functions will not be
    impacted. This is primarily a change from a Franchise Fund to the
    appropriated OI&T fund without a change in cost.
        The budget reflects a decision to migrate Enterprise Operations
    staff and data centers from the Franchise Fund to the IT appropriation
    (Net $0/0 FTE change). OI&T anticipates a transfer of 599 Enterprise
    Operations (EO) FTE from VA's Franchise Fund. This transfer was
    directed by VA Executive Leadership to improve efficiency and
    responsiveness of this critical infrastructure component. Sustainment
    was reduced by $151 million due to the transfer and moved into the
    staffing and support services account resulting in the 14% increase.

        Chairman Isakson. Well, thank you very much, Mr. Secretary.
    We are delighted to have you here today and appreciate your
    opening remarks. I will start the questioning, then we will go
    Republican to Democrat, after we go to the Ranking Member, all
    the way through.
        Your proposal has a unique system for senior executive
    employment within the Veterans Administration which would
    create a unique pay schedule and disciplinary system under
    Title 38. As I said in my opening remarks, accountability is
    the single most important thing we must accomplish, in my
    judgment, on this Committee and within the VA itself.
        Can you detail for the Committee the justification for the
    proposal and how you believe this solves the accountability
    problem at VA?
        Secretary McDonald. Yes, Mr. Chairman. As you know, we run
    a health care business. We run an organization that, if it were
    a company, would be Fortune 6 on the Fortune 500. We compete
    with health care professionals from the best health care
    systems in the country, whether they be medical centers that we
    are affiliated with like Duke Medical Center, or whether they
    be large health care companies like Mayo or Cleveland.
        We believe the best way to treat VA employees is as the
    health care professionals that they are, and the Title 38
    provision would give us that ability. We could pay them more
    competitively. Right now, our average medical center director
    is paid, at best, half what they can earn in the private
    sector, and we have lost several recently. We are paying them
    the best we can with the SES system.
        Separately, we can also recruit and appoint people more
    quickly because Title 38 would give us direct hiring authority.
    We believe that moving to Title 38 for all SES employees in VA
    would be a big step forward and make us competitive with the
    private sector and would improve care for veterans.
        Chairman Isakson. In the case of disciplinary action, how
    does Title 38 differ from what is now there?
        Secretary McDonald. The Title 38 in the case of
    disciplinary action would make me the appeal authority, so
    people would appeal to me. So, it would put appellate authority
    within the Department rather than in some external organization
    that looks across Government.
        Chairman Isakson. In a hypothetical example that is really
    not so hypothetical--in the Pennsylvania case that has just
    been adjudicated on appeal, that would have been appealed to
    you and not to MSPB?
        Secretary McDonald. That is correct, sir.
        Chairman Isakson. Next, we talked about the 440,000 pending
    appeals at the Veterans Administration. You made a statement in
    a House Committee meeting the other day that the proposals in
    here are really a straw man for something like that. Do you
    have specific proposals in terms of that in this budget
    proposal that you are offering?
        Secretary McDonald. Yes, sir. We have offered a specific
    proposal, but also, as we are talking right now, we have been
    meeting with veterans service organizations, Members of the
    Committee and other members of Congress, and are making
    progress in getting alignment as to what that proposal should
    look like. I suspect while the proposal we have submitted is a
    good one, we can make even further enhancements to it which
    could create a greater consensus moving forward. As we have
    discussed, we expect to have all that done by the end of March
    so we can get something done with this.
        Chairman Isakson. Are you moving away from the fully
    developed claim process?
        Secretary McDonald. No, sir. We think the fully developed
    claim is a good step on the way to a totally new appeals
    process. But, it does not fundamentally change the process to
    the degree that we think it needs change.
        Chairman Isakson. Using the word of the day, which is
    ``accountability,'' I think it is important for our veterans to
    have accountability in the system to make sure if they have an
    appeal, that it is justified and is heard, but make sure also
    that one veteran or two veterans or a handful of veterans'
    appeals do not cause other veterans to get a slow response on
    an appeal that otherwise would not be an appeal to begin with.
    One of the things I have seen from talking with Dr. Shulkin and
    some of the others at the VA, there are a handful--and I use
    ``handful'' as a reference--of appeals that over and over and
    over again, over a series of years, have still been active and
    in process. Every time one of those takes place, it takes time
    away from a claim that is recently filed by a veteran who
    deserves meritorious treatment in a hasty way.
        I personally am very supportive of us finding a way to give
    the tools necessary to ensure the veteran gets accountability,
    but also have some ability to cut that off so it is not an
    ongoing process.
        Secretary McDonald. Yes, sir, you are right. As you know,
    10 to 11 percent of veterans appeal the decisions. Of those 10
    to 11 percent, it is about 2 percentage points, 2 percent of
    all veterans that, when they appeal, drive multiple appeals,
    and their appeals comprise about 45 percent of all appeals. So,
    you are right. About 20 percent of veterans are creating about
    half of the work. That is an unacceptable situation and one
    that we should resolve to the benefit of all veterans. As we
    have committed in our 2016 end-of-year outcomes, we would like
    by the end of this year to be able to have a process in place
    that eventually would lead to 1 year for a veteran appeal.
        Chairman Isakson. Just one last comment. In your prepared
    remarks, you said that 10 of the 16 top leaders in the VA are
    new hires that you have brought in, people from hospitals,
    people from the private sector. Dr. Shulkin and Ms. Council,
    are they two of those ten?
        Secretary McDonald. Yes, sir, they are.
        Chairman Isakson. Well, let me make a comment. If the other
    eight of those ten are doing as good a job as those two are, we
    are going to be in much better shape at the VA, because
    publicly I want to acknowledge Dr. Shulkin's help in the
    meetings we have been having at the VA to deal with the
    accountability issue and some of the other things going on.
    They are doing a great job, and I appreciate the fact that they
    have been very responsive to us, as Ms. Council has done on the
    IT situation as well. So, thank you very much.
        Secretary McDonald. Mr. Chairman, as you know, we have an
    IG nominee who we all think very highly of, I think the
    Committee thinks very highly of. We would love that to get
    passed on the Senate floor.
        Chairman Isakson. For the record, I am meeting individually
    with people that I think need to be met with to try and see if
    we can't get that to a vote on the floor. We are not there yet,
    but we are making progress.
        Senator Blumenthal?
        Senator Blumenthal. Thanks, Mr. Chairman.
        I want to first just mention the elephant in the room,
    which is the potential hurdles and obstacles to approval of
    this budget in the potential gridlock and paralysis in the
    budget process overall. The VA illustrates to me the urgency of
    putting aside partisan differences, putting aside extraneous
    issues, and proceeding to a budget regardless of what our
    colleagues in the House of Representatives may think about the
    budgeting process and regardless of other issues relating to
    the Supreme Court or any other kinds of challenges that we face
    here. I think that you have come here in good faith to argue
    for some really urgent priorities that must be met, and they
    are commendably a part of this budget.
        Earlier this year, the Hartford VARO reached out to me
    because they were informed that there were no additional
    hearing dates, travel board or teleconference dates for
    Hartford in the remainder of the fiscal year in terms of the
    appeals process. After my inquiry, the BVA additional
    teleconference date has been added, which I appreciate. But, I
    think that that experience illustrates the importance of
    reforming the appeals process. The VSOs have focused on it, and
    I assume you agree it should be a priority.
        Secretary McDonald. Yes, sir, absolutely. I also agree on
    the budget. I would tell you that this is my second budget at
    the VA, but I feel better this year than I have ever before
    about connecting our strategies with the budget, with
    resources, with the legislation required, and with the 12
    priorities that we have listed for 2016.
        This is more than just a budget. This is the delivering of
    outcome for veterans. We need this budget in order to do that,
    but we also need the legislation and the other things that we
    have talked about as a group.
        Senator Blumenthal. Focusing for the moment on delivery of
    services to women veterans, there is a request for $515.4
    million for gender-specific health care for women and nearly
    $5.3 million in total care for women, which recognizes the need
    to consider the growing female veteran population in our
    country and provide care that is both welcoming, efficient, and
    proficient to meet their needs.
        I am still concerned that the culture of the VA and the
    ability to welcome female veterans and provide health care
    services to them in a sensitive and tailored manner may not be
    keeping pace with the number and the needs of those veterans.
        Could you please tell us how you intend to use the
    requested funding for women's health care to address, frankly,
    the pervasive feeling of many female veterans that the VA
    remains a male-focused culture and organization?
        Secretary McDonald. I am really glad you raise this,
    Senator Blumenthal. This is such an important topic to us. I
    really think this will be one of the seminal issues of
    transformation that we will be held responsible for as people
    look back years from now.
        As you know, since 2000, the number of women veterans
    seeking VA health care services has doubled, from 160,000 to
    over 447,000 in fiscal year 2015. This is a major focus for us.
        We have enhanced care for women. We have designated women's
    health providers at every site where women access VA health
    care. Currently, 100 percent of our medical centers and 94
    percent of our community-based outpatient clinics have at least
    one designated women's health provider. We need to get that to
    100 percent.
        We have trained over 2,400 providers in women's health to
    ensure that every woman veteran has the opportunity to receive
    her primary care from a women's health provider. We have women
    veteran program managers, maternity care coordinators at every
    health care facility. We provide gynecological care, including
    maternity care and 7 days of newborn care, to all women
    veterans either on-site--that is through 130 health care
    systems--or through care in the community.
        This is really a very important point to us, and we have to
    continue to make this transition over time, because as you have
    said, it is going to continue.
        Senator Blumenthal. Thank you very much. My time has
    expired. I have other questions that I may submit for the
    record, but thank you to you and your team for being here
    today.
        Thank you, Mr. Chairman.
        Chairman Isakson. Senator Rounds.

            HON. MIKE ROUNDS, U.S. SENATOR FROM SOUTH DAKOTA

        Senator Rounds. Thank you, Mr. Chairman, and let me just
    begin by saying that I have appreciated the bipartisan approach
    by both the Chairman and Ranking Member Blumenthal as we move
    through the different and challenging issues before us,
    including the budget itself. I am optimistic that this
    Committee will work very favorably in moving forward in this
    particular budget process. I have only been here a year, but I
    have been encouraged by the way this group here has worked on
    these issues.
        One of the major challenges that has hampered the Choice
    Program has been the VA's shift of cost for care to the
    veterans who have been utilizing the Choice Program. Veterans
    are paying far more for their care under Choice than they
    traditionally paid under normal VA facility care or non-VA
    care, typically as a result of deductible and co-pay
    calculations that are different when they are seen in the
    private sector.
        As you consolidate the care in the community programs, do
    you envision veterans continuing to pay more out-of-pocket to
    be seen in the private sector?
        Secretary McDonald. Senator Rounds, it is a great point. We
    would like, when we consolidate care, to go to one payment
    system, one reimbursement system, so that we eliminate the
    complexity. You are right that when the Choice Act was created,
    veterans were forced to pay higher co-pays to use the Choice
    actual service in order to keep the costs down of the total
    Choice Act. If they use a VA service, there is no co-pay. If
    they use a Choice Act, there is a co-pay. So, we do think that
    change needs to be made.
        David?
        Dr. Shulkin. Yes, Senator, the primary difference is that
    the way the Choice legislation was written is that in Choice VA
    is the secondary payer. So, a veteran has to use their primary
    insurance, and they have to use their co-pays.
        What we have suggested in our legislative proposals is to
    make VA the primary payer and to consolidate all the care in
    the community. That would eliminate this disparity that
    veterans see today.
        Senator Rounds. In South Dakota, we continue to hear that
    timely provider payment under the Choice Program is a
    continuing issue. Recently, I heard from a private sector
    provider that has over $3.3 million in payments that have been
    outstanding for more than 90 days. What specific initiatives
    are you putting in place to accomplish your 2016 breakthrough
    priority of getting 85 percent of claims paid within 30 days?
    It looks to me like you have got quite a hill to climb.
        Secretary McDonald. First of all, please give us the name
    of that provider. We will go back and make sure they get paid.
        Second, the systemic change we need is to follow the best
    practices in the private sector, which is to pay the provider
    based on them providing the service, not waiting for the paper
    documents, which has been our past practice. Dr. Shulkin has
    put that change in place. We have another week or so until we
    actually activate it. But, that means providers will get
    payments virtually as soon as they provide the service.
        David?
        Dr. Shulkin. Yesterday we delivered to the two TPAs a
    proposal for them to sign that would decouple documentation
    from payment so we can make faster payments to providers.
        Senator Rounds. I have heard that in my State VHA has made
    the conscious decision to shift certain health care services
    over to the Choice Program and away from VHA facilities.
    Yesterday, we saw a similar story out of Cincinnati that
    contained allegations of services being switched to Choice in
    the community in order to make hospital finances look better.
        Whether that is the case or not, how do you reconcile
    shifting services over to the Choice Program and in the process
    eliminating capability to perform those services when Choice is
    clearly a temporary program designed to supplement VA care and
    its authorization expires next year?
        Secretary McDonald. The most important thing in making any
    of these decisions is what is best for the veteran. Nothing
    else should be a consideration. Unfortunately--and I am not
    saying this is happening because we have to investigate the
    allegation you described. Unfortunately, because of the fact
    that we have got 70 line items of budget where we cannot move
    money from one to the other, you may recall last year I had to
    come to this Committee and ask for the ability to move money
    from the Choice budget that was for care in the community to
    the VA budget that was for care in the community. Same purpose,
    but we had to ask your permission to move that money.
        What we have put in our 2017 budget proposal is a proposal
    to give us flexibility on only 2 percent of our funding so that
    we can move money between accounts--again, with the idea that
    we have got to get the best care for the veteran.
        Senator Rounds. Thank you. My time has expired. Thank you,
    Mr. Chairman.
        Chairman Isakson. Thank you, Senator Rounds.
        Senator Tester?

               HON. JON TESTER, U.S. SENATOR FROM MONTANA

        Senator Tester. Thank you, Mr. Chairman.
        I want to go back to Title 38. Could you tell me, Mr.
    Secretary, how many medical center directors were either acting
    or without a position or director?
        Dr. Shulkin. I would be glad to. Today, Senator, we have 34
    medical centers without a permanent medical center director. I
    will tell you, being responsible for the health care
    organization, there is no way I can assure that we are doing
    the best for veterans with 34 open positions.
        Senator Tester. How many are acting? Or does that include
    acting?
        Dr. Shulkin. That includes acting. Those are ones that we
    need to fill.
        Senator Tester. Can you tell me how long it takes you to
    recruit and appoint an M.D., or a P.A. or a nurse right now?
        Dr. Shulkin. Approximately--they differ a little bit, but I
    am going to say, on average, 6 months?
        Senator Tester. Six months? OK. Now, if we make the changes
    that you have recommended, how long would it take you to
    recruit and appoint?
        Dr. Shulkin. Well, I think the change to Title 38 is going
    to help us get more candidates and better candidates. We have
    many medical centers that, frankly, have had openings for years
    and years because we do not have candidates. So, I think it is
    going to increase the pool. We have to--one of the Secretary's
    12 priorities is to streamline the hiring process, because we
    have to get to where the private sector is. We have to be able
    to match or beat where the private sector is to get the best
    candidates.
        Secretary McDonald. But, the Title 38 recruiting and hiring
    process is more streamlined than the SES process.
        Dr. Shulkin. Yes.
        Senator Tester. So, your hope is to get it down to what
    kind of a timeline?
        Secretary McDonald. I would like to break it in half.
        Senator Tester. OK.
        Secretary McDonald. I think we can do it.
        Senator Tester. OK. You put a number of legislative
    requests forward. Is it accurate to say that veterans' access
    to care has been impeded by the legal vulnerability associated
    with referring veterans to traditional fee care outside the
    Federal Acquisition Regulations?
        Dr. Shulkin. When you say ``legal,'' the complexity of the
    system, absolutely, that is correct.
        Senator Tester. OK. I believe we have a bill--maybe not
    totally what you want, but a bill to get that done I think has
    come out of this Committee. Is it accurate to say that the VA's
    efforts to improve the quality and delivery of care have been
    impeded by the number of director vacancies?
        Dr. Shulkin. Yes.
        Secretary McDonald. For sure, absolutely.
        Senator Tester. Is it also fair to say that from a medical
    personnel standpoint the appeals process has not been working
    like it should?
        Secretary McDonald. We would agree with that.
        Senator Tester. OK. Is it also more important to say that
    you need flexibility in your budget?
        Secretary McDonald. Yes, sir, we do.
        Senator Tester. To move money around.
        In July 2014, Mr. Secretary, you were confirmed by a 97-0
    nothing. Nobody in the Senate opposed you.
        Secretary McDonald. I am still looking for those three that
    did not vote.
        Senator Tester. They were probably out campaigning for
    President. But, at any rate----
        [Laughter.]
        Senator Tester. I would just say this: as a Committee--and
    I would be happy to work with the Chairman so it is on a
    bipartisan basis--we need to push the leadership to get these
    bills to the floor to hold this man accountable. We cannot hold
    him accountable if his hands are tied; I really think that it
    is important--I mean, he came from the private sector. Ten of
    his 16 folks have come from the private sector. If we want the
    VA to work, we have got to put our trust there. If he screws
    up, he is gone. But, the fact is I trust the Secretary; I
    believe that he can get this done. I think we need to give him
    the tools to get that done. It is going to require some floor
    action on these bills with a very limited amount of time for
    floor action.
        If it would take a letter, if it would take phone calls, if
    it would take a group meeting with Senator McConnell, I would
    be more than happy to join you in that.
        The only thing I would say--and this may be parochial in
    nature, but there is an issue with travel pay right now, where
    the veteran used to get travel pay immediately when they came.
    Now, because of people thinking they were going to try to game
    the system, they go to a kiosk. Now it is a month or longer to
    get their travel pay. I am hearing a lot about this. I am not
    sure that it solves any of the problems with pay going to a
    kiosk because if a guy wants to be a crook, he will be a crook
    on a kiosk just as well. What it is doing is it is stopping
    some of our veterans from being able to get the care timely. It
    may be hard to believe, but a lot of these guys need that
    travel pay and they need it quick. So, if we can do something
    on that, I would appreciate it.
        Dr. Shulkin. Senator, we will look into that. That is not
    an intentional delay, so we need to fix that.
        Senator Tester. The last thing I would say is--and I
    attribute this mostly to the third-party providers and not to
    the VA, which we have got to get this fixed. My staff just gave
    me a chart, and you can take a look at it: 53 percent of the
    work that we do is veterans work. It used to be a third. It is
    53 percent now. That is not happening because things are going
    smoothly. I think you guys know that. We need to get it fixed.
    I think this Committee needs to do its job to help you fix it,
    and then we need to hold you accountable for that.
        Thank you, Mr. Chairman.
        Chairman Isakson. In reference to your comment in the
    beginning about meeting with Leader McConnell, for your
    edification and information, I appreciate your raising the
    visibility of those bills that we have passed out which have
    not gotten through the Congress yet. We are working on, if you
    will, an omnibus proposal that we hope to, by the end of March,
    have finished and acted upon in the House and the Senate. That
    is an aggressive game plan, but we are trying to get all that
    done. Sen. Tester, I will take you as a volunteer to be on my
    team, we will make sure we use you to help us do that--in a
    bipartisan way, too.
        Senator Tester. I would be more than happy. I think that it
    is important for us to hold the agency accountable. I think it
    is also important for us to listen to the people that are at
    the head of it and make sure we give them the tools that they
    need to be successful and then hold them accountable.
        Thank you.
        Chairman Isakson. We have got to hold ourselves
    accountable.
        Senator Tester. That is correct.
        Chairman Isakson. That may be the biggest problem of all.
    We have got to correct that.
        Senator Moran?

               HON. JERRY MORAN, U.S. SENATOR FROM KANSAS

        Senator Moran. Mr. Chairman, thank you very much. Mr.
    Secretary, welcome. Thank you for the telephone conversation
    that we had recently.
        I was interested in what Senator Tester had to say about
    case work. As you and I have talked, that has been a
    significant fact in our life, more veterans with more
    questions, I guess, and concerns. I appreciate Senator Tester
    raising that issue.
        Let me talk about a couple of items that are Kansas
    related. The Choice Act provided for a new CBOC in Johnson
    County, KS. Johnson County is the Kansas side of the Missouri-
    Kansas line in Kansas City, our fastest-growing part of our
    State. The requirement, as I understand it, is for those
    proposed medical facility leases to be submitted to GSA. Then,
    the timeframe is seemingly extraordinarily long, like 5 years
    once the decision is made to begin that lease process.
        Is there something that we can do to help speed up this
    process? We have the same issue in Junction City. Junction City
    is a bedroom community of Fort Riley with lots and lots of
    veterans. The CBOC there is needing to move out of its current
    facility, and they are looking for space, which, to my
    knowledge, they have not found. Could you bring me up to date
    on both of those. The broader question is: is there something
    we can do to help speed up the process?
        Secretary McDonald. The process does take too long. We
    have, I think--is it 16 or 18 leases right now? We are
    waiting--16. We are waiting for authorization from you all to
    move forward on.
        Mr. Murray. Eighteen.
        Secretary McDonald. Eighteen. So, you know, if you could
    authorize those, we would really appreciate it.
        Senator Moran. In the case of at least Johnson County that
    I am talking about, it is authorized.
        Secretary McDonald. OK.
        Senator Moran. Then, having been authorized, I am told it
    is at least 5 years before----
        Secretary McDonald. No--well, it should not be. We have
    worked with GSA to streamline that process, but I am happy to--
    we will come over and sit down with your staff and go through a
    streamlined timeline of how long it will take. It should not
    take 5 years.
        Senator Moran. OK. Well, there are two, if we could talk
    about the one in Junction City and the one in Johnson County.
        Mr. Secretary, let me raise a topic of construction of a
    new hospital in Leavenworth, again, a military community. The
    strategic capital investment plan lists Leavenworth inpatient
    facility as number 13 of the VA's priority list, but there were
    no funds requested in fiscal year 2017. What does that mean?
    What is the value of that 13th ranking and no funding?
        Secretary McDonald. Well, I think what it demonstrates,
    Senator, is we need more money in construction. Most of our
    priority projects are seismic projects or projects that deal
    with human safety. As I showed in my written testimony, we have
    had catastrophes happen because we have not been seismically
    ready.
        Sixty percent of our buildings are over 50 years old. We
    would love to get down through the total list, but that is
    going to require a disproportionate amount of capital to do
    that.
        Senator Moran. In that circumstance, is the VA open to
    public-private partnerships, a local entity that would build
    the facility and then lease it back? Does that speed up the
    process and help the budgetary constraints?
        Secretary McDonald. We are. There are actually two
    different processes, both of which we are looking at. One is
    something we already have experience with called ``extended use
    leasing.'' This is a process where, for example, there is a
    company called Core that built a building on our campus in
    Menlo Park that we are able to rent from them to house homeless
    veterans. That is the bill I need passed for Los Angeles,
    because I cannot do that in Los Angeles right now, and that is
    where we have the majority of homeless veterans.
        There is another process called ``public-private
    partnership,'' or ``P3,'' which we are currently exploring to
    move our San Francisco campus, which is landlocked and
    isolated. What we do not know yet is how CBO and OMB will score
    that and whether or not, because it is an extended use program,
    they will score it as if it were a capital project. We are
    looking into that. We should have an answer in March, and we
    will be back to you, because if we can do P3s, it will unlock a
    lot of capability for VA.
        Senator Moran. Maybe we can have that conversation where we
    talk about the CBOCs as well, because I think there is an
    opportunity for this kind of thing to occur in Kansas.
        My final question is: how does the CBOC issue affect the
    consolidation, Choice, community care plan? Are CBOCs any less
    valuable? Is there less emphasis as a result of Choice and
    consolidation, your program? Or----
        Secretary McDonald. No, I do not think so, but I think what
    it does is it speaks to something you and I have talked about
    before, which is when we improved access last year, we did 7.5
    million more completed health care appointments, that was in
    large part because we added over 2 million square feet of new
    space. So, every time you put a building out there, it creates
    access, advantages that you did not have before. But, what we
    have to do is we have to be more choice-ful--I do not mean a
    pun in that word, but we have to be more choice-ful about where
    we put them so we make sure we are taking advantage of all of
    our affiliates, like Indian Health Service, medical school
    affiliates, and others, and we are putting those only where
    they are required, being good stewards of taxpayer money.
        Senator Moran. I appreciate this conversation and look
    forward to having a future one.
        Secretary McDonald. Me, too, sir.
        Chairman Isakson. Senator Brown.

               HON. SHERROD BROWN, U.S. SENATOR FROM OHIO

        Senator Brown. Thank you, Mr. Chairman. Welcome, Mr.
    Secretary and all of you. Thanks for your public service to our
    veterans and to our country, all of you.
        I want to address the very serious allegations Senator
    Rounds mentioned about Cincinnati of mismanagement of the VA
    medical center and leadership of VISN 10. You and I have
    talked, Mr. Secretary, a number of times for months and months
    about some of these allegations and issues--nepotism, lack of
    cleanliness, mismanagement, staffing shortages, and fear of
    whistleblower retaliation.
        First, it is about quality of care, as you have assured us,
    and I know how much you care when you took this job about that.
    I need your assurances first that while this investigation is
    going on and the issues and problems are being fixed, you will
    ensure that veterans receive better quality and good quality
    care throughout. I know you believe that. I just want your
    assurances, at the same time restoring faith in Cincinnati that
    veterans and their families feel compromised. I am glad that
    you have agreed to visit that VA as soon as our schedules
    permit both of us to go together. Thank you for that.
        I want to talk about whistleblower issues for a moment. For
    more than a year, a number of whistleblowers have talked to my
    Cincinnati office, talked to me personally, talked to a number
    of people in my office and others. The atmosphere is, some
    workers will say, ``toxic'' where workers fear they will be
    punished for doing their jobs well. When VA employees come
    forward to voice concerns regarding improper medical care or
    other issues, I am concerned that in too many cases VA
    management has retaliated against them.
        So, I want your commitment for a couple of things, Mr.
    Secretary: one, that no employee in Cincinnati VA who did the
    right thing and advocated for our veterans will be retaliated
    against for their actions; and I want your commitment that if
    any VA employee is retaliated against for speaking up on behalf
    of veterans and patients, that you will hold those people
    accountable.
        Secretary McDonald. First of all, relative to Cincinnati,
    as you noted, Senator, the investigation is ongoing. The
    Cincinnati facility has been a five-star facility historically
    in VA, one of our very best. I have visited it a couple of
    times myself over the last 2 years. It is an important
    facility. It has been historically a good facility. We need to
    dig into this and find out whether or not these allegations are
    supported and then take action as quickly as possible to
    remediate them if they are.
        Relative to whistleblowing, you know, we were the first
    Department certified by the Office of Special Counsel to have
    done the training on whistleblowing. We take it very seriously.
    In fact, we ask all of our employees to give us negative
    feedback as well as positive feedback so we can change. That is
    why we are training them in things like Lean Six Sigma so they
    can create change themselves.
        We do not tolerate retaliation and will deal with it if we
    see it. We just do not tolerate it, and we work very closely
    with the Office of Special Counsel to make sure whistleblowers
    are protected, that they are given good jobs moving forward,
    and that people who retaliate are held accountable.
        Senator Brown. That is what you say, and I believe you, but
    that----
        Secretary McDonald. That is what I say; that is what I do.
        Senator Brown [continuing]. Is not what some people--
    apparently some people in Cincinnati that work at the VA have
    done. So, I do want the commitment that, if proven, people who
    have retaliated against whistleblowers will be held
    accountable.
        Secretary McDonald. They will. Anybody who retaliates
    against a whistleblower will be held accountable. But, again,
    what we are describing here are allegations.
        Senator Brown. I understand.
        Secretary McDonald. Let us do the investigation before we
    permit people----
        Senator Brown. That is why I said--I do not want to convict
    anybody. I did not mention names. I just said, if proven, I
    just wanted the commitment that you just gave me that----
        Secretary McDonald. Yes, just know that we get a lot of
    whistleblower----
        Senator Brown. I understand. I see that. When I was a
    Member of the House, I heard it in Brecksville. I heard it in
    Wade Park. Sometimes it was accurate, sometime it was not.
    Thank you for that.
        Let me talk briefly on--one, I want to echo Secretary
    McDonald's and Chairman Isakson's remarks about confirming Mike
    Missal at the IG. That is really important. When Cincinnati--I
    wrote to the VA about Cincinnati. Unfortunately, the letter
    went to Linda Halliday, the Deputy Inspector General, instead
    of the Inspector General. I appreciate all your comments on
    making that happen.
        Let me just close with a bit about staffing directly
    connected to Senator Rounds' comments. The report recommended
    the veterans--the required Section 301 report on staffing
    recommended 61 full-time equivalents be hired for the
    Cincinnati VA to properly meet the needs of veterans. There are
    reports that leadership at the Cincinnati VA may actually be
    abusing it by using it as an excuse to cut staff.
        Can you tell me about any of that specifically now at this
    point? Or is that something you need to share later once you
    know more?
        Secretary McDonald. We immediately sent the Office of
    Medical Inspection to Cincinnati. We do have a preliminary
    report from them, so we can--I am fine with updating you on
    that now.
        Senator Brown. OK.
        Dr. Shulkin. The other thing, Senator, that we did
    immediately was we removed the management authority from the
    VISN Director away from the Cincinnati VA to make sure that
    there was no ability to influence or to keep people from
    raising issues. So, we want this to be very transparent, and we
    will be glad, as soon as we get this final report, to review
    that with you.
        Senator Brown. How long will it take for these--whatever
    the number, up to and including the number 61, if there are 40
    or 60 or 20--how long will it take to bring in and train new
    providers?
        Dr. Shulkin. Well, it will depend on the type of providers
    that are there. Obviously, physicians and nurses take longer
    because of their orientation and credentialing period, then
    staff, front-line staff. So, there will be a spectrum along
    that line. But, the VISN and the medical center have been given
    their budget and do have the ability to hire the most critical
    positions that they need to hire right now.
        Senator Brown. All right. Thank you.
        Chairman Isakson. Senator Brown, just so it is clear on the
    record, I consider accountability to apply two ways: employee
    to supervisor, but supervisor to employee as well. We have got
    to have accountability on both sides, and that is what we are
    pushing so hard for. I appreciate your comment on that.
        Senator Tillis?

           HON. THOM TILLIS, U.S. SENATOR FROM NORTH CAROLINA

        Senator Tillis. Thank you, Mr. Chair. Thank you all for
    being here. To Secretary McDonald and the folks on the panel,
    thank you so much for the time you have invested coming to my
    office and working with me.
        I just want to emphasize what you have said that is
    critically important, that of the breakthrough priorities,
    there is very clearly instances where Congress sits in the
    critical path. If we do not take action to move forward on
    these legislative priorities, then it will either impede or
    prevent completely your ability to achieve the goals you have
    set out. I will continue to mention that and stand up for it.
        Ms. Council, I want to talk to you for a minute about IT.
    It is fantastic to have somebody with your professional
    experience in the role that you are in, and I am glad to have
    you there. Can you give me an idea of what your instincts are
    telling you as you look at this enormous IT base? You and I
    have talked about application portfolio, which we can talk in
    acronyms and most people would think it was a second language.
    Can you tell me what your gut tells you the IT platform looks
    like 5 years from now versus today in terms of off-the-shelf
    solutions, integrated platforms, those sorts of things that I
    think are, at least according to the Secretary and others, huge
    enablers to what you all are trying to accomplish?
        Ms. Council. Senator Tillis, it is great to talk to you as
    well. I will not use any acronyms this time.
        As we sort of look out into the future, one of the things
    that has become very clear, not just on intuition but on fact,
    is that we have a very complex architecture and a variety of
    different things in our midst. So, figuring out how to manage
    those today and move off of them toward the future is critical.
        One of the critical areas that I think that will look very
    different in the future is how we manage and use data and how
    we leverage that data in support of the veteran. I believe we
    have a prime opportunity with putting in a data management
    function, but putting in something that is very different than
    anyone has seen at this point that will move us forward to have
    much more agility related to our operations, related to what
    the veteran will need, increasing our ability to be much more
    mobile, have mobility being used by the veteran and our access
    to information as well as our ability to speak and engage with
    them.
        I think also when we look at our infrastructure, having a
    much more solid supply chain capability, a financial system
    that will enable much more visibility into an environment, but
    also ensuring that we have some best of breed capabilities
    wrapped around our health care as well as in our benefits
    areas.
        Senator Tillis. Well, one thing--and I want to try and get
    a lot in in the last couple of minutes, but one thing I would
    really like to see from you all over time that makes sense, not
    out of order for all the things you need to do to transform the
    IT operation, is something that would give me some sense that
    these duplicative or redundant platforms that are used out in
    the VISNs are consolidated when they make sense. There are very
    clear patterns that I can view when I take a look at these
    transition plans, and I would like to see that so I know we are
    making the organizational changes and the systems changes to
    make a lot of these things that are falling through the cracks
    and probably the root cause of a lot of the problems that we
    have. I appreciate the opportunity to maybe get briefed with
    you once you have gotten your legs there. I appreciate it.
        I want to go into a lightning round real quick because I
    want to try to stick to my time allotment.
        First, I just want to echo the sentiments here that we need
    to confirm the IG and do everything that I can to get the
    Inspector General there. It is a very vital role. We need
    somebody in a permanent position.
        Mr. McDonald, this organization chart seems to me to be an
    optimized state. I mean, it is a pyramid. It looks like you
    have got the right distribution, but today it seems to me like
    it is an obelisk. One thing that we really have not talked
    about here is the organizational change, and over time, unless
    you have data here, I would like to find out what we are doing
    in the middle to reorganize and either eliminate those
    resources or free up the resources to provide care out in the
    communities.
        Can you give me some idea--we have not talked much about
    that track. Can you give me some idea of what that looks like?
        Secretary McDonald. Well, the middle is the most important
    part, as you well know, of any organization. Number 1,
    training. We are training the leadership team. That training is
    now cascading through the organization. Twelve thousand senior
    leaders will have been trained. We are training leadership. We
    are training process mapping. We are training Lean Six Sigma,
    values, mission, all the important things. Three days of
    training.
        Number 2 is structure, spans and layers. We have to reduce
    the number of spans and reduce the number of layers.
        Senator Tillis. OK.
        Secretary McDonald. We talked about moving from 21 VISNs to
    18. That has already shown savings. That was in my oral
    testimony. But, the fact that we have so many open positions is
    an opportunity to reduce even more.
        So, with every open position, we really question, David and
    I question, and Sloan, whether or not we should fill it. We
    want to reduce spans, we want to reduce layers, and we can
    share that plan with you next time we----
        Senator Tillis. Thank you. I would like that. It is just
    because my time is short that I am cutting you off.
        Secretary McDonald. Yes, I see.
        Senator Tillis. I think seeing a measurable--instinctively,
    this organization looks like it is heavy in the middle, and
    with that comes cost and complexity and breakdowns and
    handoffs. I would like to see what that transformation looks
    like over time, both in terms of its structure and in terms of
    the people. To your point, many of them may be open, so it just
    means you no longer have a need for that position. I think that
    would be helpful so that people understand there is an
    organizational transformation that is going on.
        My last thing, just to follow up. When a veteran calls for
    help--let us say it is a distress call for a veteran who may be
    worried that they are thinking about suicide. How are these
    calls tracked? In other words, if I get reports, as I have in
    North Carolina recently, that a veteran called and was told to
    call back, how can I track that down; either make sure that
    person has been trained and has not done their job, therefore
    they should be fired, or that their supervisor has not gotten
    them the appropriate training to make sure that that is never
    an appropriate disposition, if, in fact, it is happening? What
    I want to do is at least go in and be proactive and say maybe I
    do not have the facts straight based on what has been reported
    on the ground. But, if those facts are right, then I want to go
    after that person for doing the wrong thing for a vet. I would
    like your advice on that, either in the Committee or
    afterwards.
        Secretary McDonald. Well, it is a very complex issue, so
    let me give you a headline, and then we will come over and talk
    about our Veterans Crisis Line.
        As you know, one of our priorities for this year is to fix
    the outreach to veterans and the Veterans Crisis Line. When all
    of us came, new people, to this organization, what we
    discovered was the Veterans Crisis Line, a recent IG report
    which was written starting on an investigation in May 2014, so
    before I was confirmed, found that we had a third party that we
    had contracted with that was using voicemail. Well, you do not
    use voicemail for a crisis line.
        We have put new leaders in place. We hired a person with
    experience on Philadelphia 311. They have come in. We have got
    new technology in place, new training in place. But, we have
    got to get out of the potential for a veteran being put on
    hold, having to call a different number.
        We still have some medical centers--and we are trying to
    discover which those are and then eradicate them--where if they
    call the medical center and there is an emergency, it says,
    ``Please call this number,'' rather than immediately shifting
    that call. We are trying to identify where those are and then
    shift the call automatically rather than having them call back.
        So, this is a work in progress. We are happy to brief you
    on it. It is taking us longer than we would like. Yet, it is
    one of our goals for this year, and we do need the budget to do
    it.
        Chairman Isakson. Thank you, Senator Tillis.
        Senator Sullivan?

              HON. DAN SULLIVAN, U.S. SENATOR FROM ALASKA

        Senator Sullivan. Thank you, Mr. Chairman. I appreciate the
    witnesses' focus on these very important issue. Mr. Secretary,
    good to see you again.
        Dr. Shulkin, I wanted to follow up on a couple things. Dr.
    Shulkin, I sent you a letter dated January 4, 2016. This is on
    the ongoing issue. It is a bit of a minor issue in some ways,
    but it is a huge issue also. I think you and I have seen this--
    we have been talking about it for a while now, about veterans
    who are hounded by collection agencies for unpaid bills where
    the services were approved by the VA and now somehow our
    veterans are getting saddled with that. The letter had a number
    of--actually, pages of cases that last time we spoke--last time
    you testified, you mentioned to me to get you those specific
    examples. I did. Can you give me an update on where we are on
    that? This is something that I think we should just nip in the
    bud, kill. I mean, it is outrageous that we have vets going
    through that kind of stress.
        Dr. Shulkin. I absolutely agree, and I heard this directly
    from you and from veterans when we were together in Alaska as
    well. So, this is a short-term problem and a little bit longer-
    term problem. Fortunately, I think we have solutions for both.
        The short-term issue, we do not want veterans put in the
    middle, and so we have established a toll-free number--I wish I
    had the number memorized, but I will get it to your office--
    where if a veteran lets us know about that situation, we will
    intervene immediately. We have done over 400 interventions in
    the last 3 weeks since we put that number up.
        Senator Sullivan. Great. Thank you.
        Dr. Shulkin. We want to know from all your offices because
    we want to help, and----
        Senator Sullivan. Is there something legislatively we need
    to do to fix this at all?
        Dr. Shulkin. No.
        Senator Sullivan. Just let them know that if that is an
    issue, they should call you guys, and you will take care of it.
        Dr. Shulkin. What has happened is because we have had a
    problem in paying on time, the veteran has been put in the
    middle, and those are the ones that we want to stop. Right
    before you came in, we talked about we now actually have
    delivered to the TPAs yesterday the contract for them to sign
    that will decouple medical documentation from payment so we can
    get much better at making payments and keep these situations
    from happening.
        Senator Sullivan. OK. If you can follow up on the specific
    ones I have in that letter----
        Dr. Shulkin. Absolutely.
        Senator Sullivan [continuing]. That would be very useful.
        Dr. Shulkin. Yes.
        Senator Sullivan. I wanted to next go to the issue with
    regard to the appeals process. Mr. Secretary, I noted that the
    budget certainly focuses on this. It is an issue that--I know,
    you know the numbers, but 400,000 veterans have appeals pending
    as of January 2016; 80,000 of those are older than 5 years old;
    5,000 of those are older than 10 years old. I put forward a
    bill, S. 2473, with very strong bipartisan support on this
    Committee. I will not go through all the elements of it, but we
    certainly want to work with you. I think my staff has been
    working with your staff. I think you are supportive of the
    bill.
        Could you talk a little bit about how we get our arms
    around this appeals issue? Because it does relate, of course,
    to the backlog issue, and what we do not want to have happen is
    alleviate the backlog, then have the appeals become the
    problem. We think there are some good things in the bill that a
    number of us have cosponsored, but I would like your view on
    that, particularly because you do seem to be focused on it in
    the budget.
        Secretary McDonald. We do think moving forward with the
    fully developed appeals process makes sense. We are supportive
    of that. But, we do not think it goes far enough to get to what
    we think is a breakthrough--one of our 12 breakthrough
    objectives, which is to be able to decide an appeal in a year.
        Senator Sullivan. Yes.
        Secretary McDonald. To do that, what we put together here
    in this budget is a plan where we add more people now in the
    short term in order to knock the backlog down as much as we
    can, but at the same time we redesign the appeal law, which is
    over 80 years old, so that we can get to that point later where
    we deal with each appeal within a year. That will actually save
    us money. That will save the Government money and save
    taxpayers money.
        To do that, we are going to have to deal with the fact, as
    I said earlier, that there is only a small group of veterans
    that are gumming up the system for everyone else. Ten to 11
    percent of veterans appeal; 2 percent of veterans created about
    45 percent of the appeals. Some have appealed 25 times, 50
    times. The majority of those appealing, the majority, are
    already receiving some form of compensation--maybe the wrong
    amount, but they are already receiving some form of disability
    compensation. Many of them who are appealing are already rated
    100 percent disabled.
        So, you know, you want to get to the point where you can
    freeze the Form 9, as we call it, and cause the person to have
    to resubmit rather than having the same person appeal over and
    over and over again, recognizing that there is no recourse that
    we have to stop them from doing that.
        Senator Sullivan. OK. We would like to work with you. I
    appreciate that update and how you are laying that out more
    strategically. We will continue to work with your staff on
    S. 2473, which we think is--it is a pilot program. You may have
    seen the legislation. We think that it offers a good
    opportunity, similar to the pilot program that the VA is
    instituting in Alaska.
        Mr. Chairman, I will just ask, via posthearing questions
    for the record, an update on where we are on the Alaska pilot
    program as well.
        Senator Sullivan. Thank you, Mr. Chairman.
        Chairman Isakson. Senator Cassidy.

             HON. BILL CASSIDY, U.S. SENATOR FROM LOUISIANA

        Senator Cassidy. Thank you. Mr. Secretary, thank you for
    being here. I have kind of a smattering of questions all over
    the place.
        What is the VA currently paying for the cost of hepatitis C
    treatment, for a regimen of hepatitis C treatment?
        Dr. Shulkin. Less than we were.
        Senator Cassidy. I got that.
        Dr. Shulkin. Our drug pricing is proprietary, so,
    unfortunately, I cannot say exactly what it is. I will tell you
    that it is by far the best on the market. That is why it is
    proprietary.
        Secretary McDonald. We would be happy to tell you
    privately.
        Senator Cassidy. OK. I was just thinking about it. If
    $54,000 is what the latest regimen costs list and you are
    averaging 25 to 30 percent less, it seems like we should be
    able to treat more veterans for the $1.5 billion that we are
    giving if, ballpark, you are paying $30,000 per. It seems like
    we should be treating 50,000 veterans as opposed to 30,000 just
    to----
        Secretary McDonald. That is exactly the idea. We had a 5-
    year plan, and we are now looking at, with lower costs, how do
    we compress that plan forward and get everyone treated.
        Senator Cassidy. So, the $1.5 billion you mentioned, and I
    think 35,000 plan to be treated, actually you hope that is
    elastic on the up side.
        Dr. Shulkin. There is no doubt that is the case. Thirty-
    five thousand was what we submitted in the budget. We believe
    we can treat many more now.
        Senator Cassidy. I see. Thank you.
        Second, in this new regimen of folks, you know, having a
    new pay scale, government benefits are typically more generous
    than private sector benefits. So, if you increase--and I do not
    know if that is true for executive compensation.
        Dr. Shulkin. It is not.
        Secretary McDonald. I would argue that.
        Senator Cassidy. No, no. I am talking about retirement
    benefits. I am not talking about--so the retirement benefits
    would be roughly equivalent as well.
        Dr. Shulkin. Yes, sir.
        Senator Cassidy. OK. So, there is not a tail on this that
    is going to come back and bite us that would be greater than we
    would otherwise anticipate.
        Dr. Shulkin. No, sir.
        Secretary McDonald. No, sir.
        Senator Cassidy. OK. By the way, just to be sure, clearly
    when industry decides to downsize, a lot of middle management
    and top management also goes. But, obviously, our current civil
    service restricts the ability to release folks even when they
    are no longer needed. It is great for the individual. It is
    terrible for the taxpayer and, arguably, bad for the veteran.
    Under this new authority, if you downsize, if we no longer need
    this facility, for example, can you immediately release the
    person without having to go through a complicated process?
        Secretary McDonald. Title 38 gives us much more flexibility
    to do that.
        Senator Cassidy. Much more flexibility. Would it be as
    flexible as the private sector or----
        Secretary McDonald. Virtually as flexible as the private
    sector. I am trying to think. David?
        Dr. Shulkin. The private sector differs. Some people have
    extended contracts. Other are at will. Title 38 is going to be
    somewhere in between.
        Senator Cassidy. I get it. OK.
        Now, you mentioned in your testimony regarding closing
    unsustainable facilities, and we are actually interested in
    this, and we sent a poorly worded request and now we have a
    better worded request trying to figure out, you know, where
    these facilities are. You attempted to close one in
    Massachusetts, as you mentioned, but you ran into environmental
    issues. I think I have heard you say it before, but just for
    the record, tell me, if you have all these vacant and
    underutilized facilities, what are the three top obstacles in
    closing them, may I ask?
        Secretary McDonald. Number 1 would be congressional
    opposition, and congressional opposition born by perhaps
    veteran opposition. I mean, if you are a veteran and the
    hospital where you go is in a remote area and that hospital
    only serves five patients a day, it obviously is very expensive
    to run a hospital serving five patients a day. But, if you are
    one of the patients being served, you obviously want it to stay
    open.
        Senator Cassidy. You mentioned, though, that you have 370
    facilities which are either fully vacant or less than 50
    percent occupied, which presumably would not have to be
    completely shut down but, rather, could be, OK, this wing we
    are no longer using sort of thing. Of those that are fully
    vacant, what is the obstacle to closing those?
        Secretary McDonald. Again, congressional opposition----
        Senator Cassidy. Even for something fully vacant?
        Secretary McDonald. Yes, sir. Veteran opposition. Some are
    on the historic register of buildings because, remember, 60
    percent of our buildings are over 50 years old, so we have to
    come up with an alternate use for those historic structures
    unless there is some way to obviate that law or----
        Senator Cassidy. Now, let me ask, that could include just
    boarding up and putting a fence around it, I presume?
        Secretary McDonald. Yes, sir.
        Senator Cassidy. I am just saying that for the taxpayer, I
    mean, we are running this incredible deficit. We have got $26
    million that is not being used for patient care, but which is
    basically being used to not mothball buildings which should be
    mothballed.
        Secretary McDonald. Yes.
        Senator Cassidy. I would be an advocate for just putting
    the fence around it until, you know, something could be done,
    it could be sold or developed or something.
        Any other reasons? I am sorry I interrupted you.
        Secretary McDonald. No. Those are the primary reasons.
        Senator Cassidy. OK. Downsizing from 50 percent use to, you
    know, closing off a wing. What is the obstacle there?
        Secretary McDonald. Again, it depends on the historic
    structure of the building and what it is used for.
        Dr. Shulkin. Yes, we do close off wings in bigger
    buildings, but they still are very expensive for us to
    maintain. You still have to maintain the pipes and the heating
    and other types of things. So, what we normally refer to is the
    10 or 11 million square feet that costs us the $25 or $26
    million a year.
        I think in some cases we are being shortsighted in not
    putting in the capital investments to make the upgrades. When
    50 percent of our buildings--or 60 percent of our buildings are
    more than 50 years old, you know that we are maintaining
    systems that are very, very expensive to maintain that, using
    today's technology, we would be able to do a much better job by
    investing some money right now.
        Senator Cassidy. Well, typically, when they rebuild a new
    hospital, they tear it down because the code is so--you get
    grandfathered in until you break a wall, and then you have got
    to institute the whole code. I could see it would also be more
    cost-effective just to cut your losses.
        I yield back. Thank you.
        Chairman Isakson. Thank you, Senator Cassidy.
        Senator Boozman?

             HON. JOHN BOOZMAN, U.S. SENATOR FROM ARKANSAS

        Senator Boozman. Thank you, Mr. Chairman. Thank you all for
    being here, and we do appreciate your hard work. Also, I very
    much appreciate the ability to get in touch with you and you
    all being very accessible.
        You mentioned several accomplishments that you all have
    made, rightfully so, and I think that is one of those that
    people do not think about, but the accessibility really is
    important to Members of Congress.
        In going along with that, you also said that the systemic
    problems could not be fixed overnight. Can you talk a little
    bit about some of the biggest obstacles that you face in that
    regard? Is there need for additional legislation to help you in
    that regard?
        Secretary McDonald. Senator Boozman, thank you so much for
    the question, and thank you for the time we spent together. To
    me, job one of any leader is to get the right leadership team
    in place. Frankly, it has taken me too long to get 10 of the 16
    leaders in place since I came on board. I wish the nomination
    and confirmation process were more quick, which we have talked
    about the IG as an example of that.
        I will tell you also, within the organization, getting new
    leaders in place is job one, and that is why we have
    recommended taking the SESs from Title 5 to Title 38. We are in
    the process of revamping the recruiting process as well. But,
    for me, that is job one. We have got to get the right leaders
    in place.
        Senator Boozman. The latest decision by the Merit Systems
    Protection Board overturned disciplinary action. I think we
    have a situation now where they have overturned more than they
    have upheld.
        Secretary McDonald. They are batting a thousand. They have
    overturned every one.
        Senator Boozman. Which, you know, is sad. You were blessed
    and worked hard and got in a situation where you headed one of
    the biggest, most respected corporations in America. When we
    visited, I think you pointed out that if the VA were a
    business, it would be the sixth largest in the country.
        Secretary McDonald. Yes, sir, that is correct.
        Senator Boozman. Can you talk a little bit about how
    impossible it is to run an efficient entity where you simply do
    not have the ability to discipline people when they need to be
    disciplined? With that size, the reality is that there are
    going to be situations where people need to be disciplined,
    need to be held accountable. So, please talk to us a little bit
    about how we can help you in that regard to see if we can get
    this straight.
        Secretary McDonald. I will start with the last question
    first. We think the right approach is this proposal that we are
    all working on together, the White House and Congress----
        Senator Boozman. As far as legislation.
        Secretary McDonald [continuing]. On going from Title 5 to
    Title 38 for the SES employees. As I was sharing with the
    Chairman--I think we talked about this when we were together--
    we have worked hard to connect performance with outcome. I
    talked in my testimony about how bonuses and rewards are down
    in the VA. We have a ranking of our----
        Senator Boozman. So, the old days of just handing out a
    check are over.
        Secretary McDonald. Over.
        Senator Boozman. Good.
        Secretary McDonald. The ranking of our performance by
    performance level is, I would argue, best-in-Government and
    fully equal to best in the private sector. So, for example, the
    top ranking, one, which would be considered the most
    outstanding, in 2012 over 25 percent of the people were rated
    that way. Today, it is around 10 percent. The steps that we are
    taking are giving people a good knowledge of what they have to
    accomplish, holding them responsible for doing that, then
    making the reward match that. That is part of the training that
    we are doing. This Leaders Developing Leaders training is all
    about that, accountability and responsibility. But, we think,
    again, changing the SESs from Title 5 to Title 38 would be a
    big help.
        Senator Boozman. Right. That is so important.
        You mentioned the VetLink program. I think about 3 percent
    were dissatisfied, which, again, that is a low number. What do
    we do about the 3 percent? How do we follow up on that?
        Secretary McDonald. Just in general, we are putting in
    place a standard veteran satisfaction measure across the
    enterprise, and this will be the first time ever that VA has
    had this, believe it or not. We will follow up with all the
    veterans who demonstrate some level of dissatisfaction by
    getting the verbatim comments and then acting to remediate what
    their verbatim comments are. That is what we are trying to do
    with VetLink, is to make sure we take those comments in. Then,
    the medical center director has got to react to them and make
    changes right on the spot.
        Senator Boozman. Very good. Well, again, thank you for
    being here.
        Secretary McDonald. Thank you.
        Senator Boozman. I appreciate your service.
        Thank you, Mr. Chairman.
        Chairman Isakson. Well, thank you, Senator Boozman, and
    thank you for bringing up the part about the accountability.
    Earlier in the hearing, the Secretary in his testimony
    addressed that subject and a number of Members have as well. I
    think the fact that you, Secretary McDonald, independently
    brought that up as your first comment--we are in a situation
    where you have got a toolbox that does not have all the tools
    you need in it to really run the agency the way you would like
    to and the way it should be. I commend you on the things that
    you have done, but let us stick to our goal of by the end of
    March getting a new toolbox and giving you the tools that you
    need to have accountability as a mechanism that works in the
    VA.
        Thank you, Senator Boozman. Thank you, Mr. Secretary.
        [The posthearing questions to Secretary McDonald follows:]
     Response to Posthearing Questions Submitted by Hon. Johnny Isakson to
                      U.S. Department of Veterans Affairs
                         veterans health administration
        Question 1.  The Secretary testified that the Veterans Health
    Administration (VHA) is looking to expand capacity by ``focusing on
    staffing, space, productivity, and VA Community Care.'' Specifically,
    he noted the Access Stand Down VHA held last fall to review and
    schedule consults that were open more than 30 days, hired more than
    41,000 health staff, the activation of more than 2.2 million square
    feet of space, a nine percent increase in physicians' Relative Value
    Units, and 2.4 million appointments in the community.
        A. What other improvements has VA reviewed that would increase
    access, such as night and weekend hours for certain clinics; extending
    the hours of the operating rooms to match the private sector; or
    increasing a physician's panel size to also match the private sector?
        Response. The Department of Veterans Affairs (VA) is committed to
    providing timely access to Veterans as determined by their clinical
    needs. We strive for all Veterans to have safe, high-quality,
    personalized, and timely care wherever they receive their health
    services. VA has made progress in improving appointment availability.
    VA is currently completing more than one in five of its patients'
    appointment requests on a same-day basis. Additionally, we are making
    strides to reduce the number of Veterans waiting longer than 30 days by
    ensuring that all clinic management teams have the processes,
    structure, and resources to make real-time adjustments to address the
    needs of their specific population.
        As part of a large-scale and immediate effort to assess the urgent
    health care needs of Veterans, VA conducted a second ``Access Stand
    Down'' on February 27, 2016. The nationwide, one-day event resulted in
    VA reviewing the records of more than 80,000 Veterans to get those
    waiting for urgent care off wait lists. Newly released results of the
    Access Stand Down show that 93 percent of Veterans waiting for urgent
    care have been contacted, with many receiving earlier appointments.
    VA's ability to meet the primary and urgent health care needs of our
    Veterans is a priority for us, and is why we established MyVA, which
    focuses all that we do around our Veterans.
        Nationally, VA completed more than 57.36 million appointments from
    March 1, 2015, through February 29, 2016. This represents an increase
    of 1.6 million more appointments than were completed during the same
    time period in 2014/2015. VA completed 96.46 percent of appointments in
    February 2016 within 30 days of clinically indicated or Veteran's
    preferred date. VA increased its total clinical work (direct patient
    care) by 10 percent over the last 2 years as measured by private sector
    standards (relative value units). This increase translates to roughly
    20 million additional provider hours of care for our Veterans. VA is
    also working to increase clinical staff, add space, and locations in
    areas where demand is increasing and extending clinic hours into nights
    and weekends, all of which have helped increase access to care even as
    demand for services increases.
        Additionally, VHA's new initiative, MyVA Access, represents a major
    shift for VA by putting Veterans more in control of how they receive
    their health care. MyVA Access is a declaration from VHA employees to
    the Veterans they care for; it is a call to action and the
    reaffirmation of the core mission to provide quality care to Veterans,
    and to offer that care as soon as possible to Veterans how and where
    they desire to receive that care. MyVA Access ensures that the entire
    VA health care system is engaged in the transformation of VA into a
    Veteran-centered service organization, incorporating aspirational goals
    such as same-day access to mental health and primary care services for
    Veterans when it is medically necessary.

        B. Of the more than 41,000 employees VA hired, how many of those
    positions are funded through section 801 of the Veterans Access,
    Choice, and Accountability Act of 2014?
        Response. As of March 31, 2016, VHA had approximately 10,850 new
    full-time employees (FTEs) on board that are funded by Section 801 of
    VACAA hires, exceeding the hiring goal of 10,682 FTE. VHA continues to
    track VACAA onboards for financial reporting, but new hires for VACAA
    ceased at the end of pay period 26 on January 9, 2016.

        Question 2.  When VA submits the President's request for medical
    care accounts, VA frequently revises the amount for the current fiscal
    year request that was appropriated in advance. The process has been
    referred to as VA's ``second bite of the apple.'' According to
    testimony at the Committee's budget hearing, the Paralyzed Veterans of
    America (PVA) indicated they questioned VA whether the requested level
    for fiscal year (FY) 2018 would be sufficient to meet their needs.
    According to PVA, in response, VA ``half-heartedly admitted that they
    do not believe it is going to be sufficient either.'' PVA indicated
    that, since Congress has only revised the advanced appropriation amount
    twice, ``the track record does not lend itself to underestimating now
    to get it corrected later.''
        A. What is VA doing to ensure the advanced appropriation request VA
    submits to Congress reflects a more accurate amount going forward?
        Response. The Advance Appropriation allows VA health care to avoid
    the financial limitations of a Continuing Resolution or a lapse in
    funds that could lead to a shutdown of VA health care operations.
    Funding of the Advance Appropriation establishes an initial VA health
    care budget to continue operations until the full appropriation amount
    is enacted. The updated President's Budget request for adjustments to
    the Advance Appropriation (the ``second bite'') is intended for the
    administration to fully evaluate the resource requirements of the VA in
    context of the entire Federal budget. Estimates can also vary
    significantly in the year between requests based on updates to the
    Enrollee Health Care Projection Model, newly authorized benefits,
    emerging requirements such as Hepatitis C drugs, recommendations for
    changes generated by the Commission on Care, and sequestration limits.

        B. In the budget justification, VA indicated that the increases
    from FY 2017 to FY 2018 are ``offset by partial decreases from the 2017
    levels for other programs.'' Please list all programs that will offset
    the increase for FY 2018 and detail the reasons for the decreases in
    those programs.
        Response. The $1.386 billion dollar 2018 Advance Appropriation
    increase over the 2017 appropriation request is due to the following
    factors:

         Increases in the initial 2018 estimate are offset by
    partial decreases from the 2017 levels for other programs, including
    health care infrastructure enhancements, Hepatitis C treatment, and
    programs to end Veterans Homelessness (see below ``Programmatic
    Decreases, 2017 Revised Request vs. 2018 Advance Appropriation'').
         Care in the Community is maintained equally to the 2016
    Medical Services operating budget level.
         The 2017 level of core Medical Services FTE is sustained
    into 2018. The 2018 President's Budget will revisit the continuing
    costs of sustaining the new VACAA hires.
         Long-Term Services and Supports increase by $607 million,
    driven largely by cost estimates provided by the Enrollee Health Care
    Projection Model and projected State Nursing Home growth.
         CHAMPVA, Caregivers and other health care programs
    increase by $259 million to fund annual increases in workload.
                             Programmatic Decreases
              2017 Revised Request vs. 2018 Advance Appropriation

                             (Dollars in Thousands)

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Many of the reductions were the result of the funding level
    available under the budget agreement, with affordability across all
    programs being a key driver. For example, the reduction of Hepatitis C
    funding from fiscal year (FY) 2017 to FY 2018 is not based on reduced
    demand but on affordability within VA's Advance Appropriation request
    ``top line'' funding level. Estimates for these programs will be re-
    evaluated during the 2018 budget cycle.

        Question 3.  The budget justification indicates a future goal of
    VHA's is to create a Transitional Care Program Office within VHA to
    concentrate management of transition care programs.
        A. Please describe in detail the duties of this office and provide
    an organizational chart of the office and where it would be placed in
    VHA's organizational chart.
        Response. Care Management and Social Work Services (CM/SWS)
    proposes realigning the Federal Recovery Coordination Program (FRCP)
    back under the Transition and Care Management (TCM), CM/SWS, to
    integrate care coordination services under one leadership and create a
    synergy to further enhance care coordination services for
    Servicemembers and Veterans (SM/V) and their families. The Program
    Office will not only centralize care coordination services, but also
    support an inter-professional model of transitional care, which
    includes, but is not limited to, nurses, physicians, pharmacists,
    mental health clinicians, and social workers.
        VA operates a number of case management and care coordination
    programs that provide assistance to transitioning SM/V, including
    Transition and Care Management Services and the FRCP. These two
    programs assist wounded SM/V to navigate the recovery care continuum.
        Transition and Care Management Services leads two national
    programs:

        1) The VA Liaison Program consists of 43 VA Liaisons for Health
    Care at 21 Military Treatment Facilities (MTF) to facilitate ongoing VA
    health care for ill and injured Servicemembers transitioning from
    Department of Defense (DOD) to VA. Since the inception of the program,
    VA Liaisons for Healthcare have coordinated over 70,000 transitions. In
    FY 2015, VA Liaisons for Healthcare coordinated 11,221 transitions;
    provided 22,108 professional consultations and 2,543 briefings; and
    ensured that Servicemembers transitioning from DOD to VA received
    timely access to care by ensuring that 100 percent of Servicemembers
    who wanted VA health care had an initial VA appointment scheduled at
    the VA health care facility of their choice; and ensured that 89
    percent had appointments scheduled prior to leaving the MTF.
        2) The TCM Program consists of a TCM team at each VA Medical Center
    to provide comprehensive and specialized transition assistance and
    ongoing case management services to Post-9/11 Veterans as they
    reintegrate into their home communities and into VA health care. VA has
    approximately 400 TCM case managers nationwide providing case
    management services to almost 35,000 Veterans. In FY 2015, 90 percent
    of these Veterans were contacted regarding their individualized care
    management plan, resulting in over 367,000 contacts.

        The FRCP was developed as a joint program by VA and DOD, in
    January 2008, to provide care coordination services to SM/V who were
    severely wounded, ill, or injured after September 11, 2001. The program
    utilizes Federal Recovery Coordinators (FRCs), either social workers or
    nurses funded by VA Central Office, to monitor and coordinate clinical
    services, including facilitating and coordinating medical appointments;
    and non-clinical services, such as providing assistance in obtaining
    financial benefits or special accommodations needed by program
    enrollees and their families. FRCs currently serve approximately 400
    SM/Vs, of which 27 percent also have a VA Lead Coordinator (i.e., TCM
    Case Manager).
        Aligning the two entities providing care coordination services
    under one leadership would integrate the two programs and create a
    synergy to further enhance care coordination services for SM/V and
    their families.

        B. Please provide the Committee with the expected funding level for
    the office, the number of full-time equivalent employees (FTE) to
    include a break out of number of title 5 employees and number of title
    38 employees.
        Response. The VHA Transitional Care Program Office is an
    aspirational project for the future, with most (if not all) of its
    funding needs derived from current resources. However, there is no
    specific resource or budget request for it at this time.

        Question 4.  The number of unique patients VHA estimates will
    receive mental health care from a non-VA provider increased by 17
    percent above the FY 2016 current estimated level and by 50 percent
    above the FY 2017 advanced appropriations. However, the number of
    unique patients is expected to decrease by 9 percent in FY 2018. In
    addition, the number of unique mental health patients receiving care in
    the community shows significant increases between the FY 2017 budget's
    estimated level and the FY 2018 advanced appropriations estimate.
        A. Please explain, in detail, the reason for the significant
    changes in the estimated number of unique patients accessing care in
    the community.
        Response. In projecting future Veteran demand for VA health care,
    VA uses the Enrollee Health Care Projection Model to account for the
    unique characteristics of the Veteran population, VA health care
    system, environmental factors impacting Veteran enrollment, and use of
    VA health care services. Growth in expenditure requirements to provide
    care to enrolled Veterans has been primarily driven by health care
    trends, the most significant of which is medical inflation. Health care
    trends are key drivers of annual cost increases for all health care
    providers--Medicare, Medicaid, commercial providers, and the VA health
    care system.
        In 2015, the VACAA significantly expanded access to VA health care
    for enrolled Veterans. VACAA increased VA's in-house capacity by
    funding medical FTE growth in VA facilities, expanded eligibility for
    care in the community for enrollees residing more than 40 miles from a
    VA facility, and assured access to care within 30 days. This additional
    capacity facilitated an increase in current enrollees' reliance on VA
    health care over the level expected in 2015. At the end of FY 2015, the
    VA Budget and Choice Improvement Act further expanded eligibility for
    care in the community paid for by VA. As a result, enrollee reliance is
    expected to continue to increase beyond what would have been expected
    in the pre-VACAA environment. This expected increase in enrollee
    reliance significantly increased the projected resources required to
    provide care to enrolled Veterans in 2017 over the 2017 Advanced
    Appropriation level.
        Additionally, the number of Veterans who received mental health
    care from VA has grown significantly since 2005. This rate of increase
    is more than 3 times greater than what is seen in the overall number of
    VA users and the number of mental health encounters or treatment
    visits, from 10.5 million in 2005 to 19.6 million in 2014, has been
    even more dramatic--at 87 percent. As a consequence of these trends,
    the proportion of Veterans served by VA who receive mental health
    services has shifted substantially. In 2005, 19 percent of VA users
    received mental health services, and in 2013, the figure was 27
    percent. We anticipate VA's requirement for providing mental health
    care will continue to grow. The FY 2017 budget request ensures the
    availability of a range of mental health services, from treatment of
    common mental health conditions in primary care, to more intensive
    interventions in specialty mental health programs for more severe and
    persisting mental health conditions. We will continue to focus on
    expanding and transforming mental health services for Veterans to
    ensure accessible and patient-centered care, whether within a VA
    facility or in the community.

        B. Please provide the Committee the types of care provided, the
    non-VA care programs (i.e., Patient Centered Community Care, Veterans
    Choice Program, fee basis, etc.) utilized to provide care in the
    community, and the amount spent under each program.
        Response. See table below.\1\
    ---------------------------------------------------------------------------
        \1\ CHAMPVA: Civilian Health and Medical Program of the Department
    of Veterans Affairs
    FMS: Financial Management System / FMP: Foreign Medical Program / CWVV:
    Children of Women Vietnam Veterans

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Question 5.  The budget justification indicates a future goal of
    the Readjustment Counseling Service (Vet Centers) is to continue to
    expand access for readjustment counseling, particularly in underserved
    areas. Please explain in detail VA's plan to expand access, including
    any plans to increase the number of Mobile Vet Centers, and explain the
    need for expanding access.
        Response. The Senate Veterans' Affairs Committee broadly defines
    ``the purposes of this readjustment counseling provision is to make
    fully available--and to encourage and facilitate the full use of--the
    resources of the VA's health-care system to those Vietnam-era Veterans
    [and now all combat and other eligible Veterans, eligible
    Servicemembers, and their families] who feel the need for counseling to
    help them in their readjustment to civilian life.'' Senate Report No.
    96-100 (April 27, 1979), accompanying Pub. L. 96-22, Veterans' Health
    Care Amendments of 1979.
        The House Veterans' Affairs Committee outlines `within the context
    of readjustment counseling, each Vet Center is tasked with three major
    functions: outreach, direct service delivery, and referral.' House
    Report No. 98-117, accompanying Pub. L. 98-160, Veterans' Health Care
    Amendments of 1983.
        VA estimates that it will continue to operate the same number of
    ``brick and mortar'' Vet Centers in FY 2017 as it did in FY 2014. In FY
    2014, the Vet Center program did request and receive VHA approval for
    291 new FTE, 63 of which were specifically placed in areas with high
    concentrations of Active Duty Servicemembers. In addition, 10 new
    Mobile Vet Centers (MVC) were implemented, bringing the fleet total to
    80 MVCs.
        The 80 MVC's are a national asset and available upon request to
    participate and provide services at any event where Veterans,
    Servicemembers, families, and community stakeholders are present. In
    order to maximize the impact of the new assets, an overall assessment
    of the entire MVC fleet was conducted. The plan covered placement of
    the newly purchased MVCs and an assessment of current assets by having
    the entire MVC Fleet (70 vehicles) meet the following criteria:

         An MVC was stationed within a 120 minute drive time to all
    major Active Duty Military Installations and Demobilization Sites.
            - Major Active Duty Military Installations refer to any base
            where the active duty servicemember population is over 10,000
            and the primary function is not basic training or a national
            training site. (i.e., Great Lakes Naval Station- basic training
            location, 29 Palms Marine Air Ground Task Force Training
            Command- national training location).
            - Demobilization sites are determined by DOD. In most
            instances, major active duty military installations are also
            demobilization sites.

         An MVC was stationed within a 120 minute drive time to
    counties with a Veteran population of 5,000-25,000.
            - The additional 20 vehicles will provide outreach and services
            to over 180 counties that met these criteria; Furthermore over
            84% of all counties within the United States will have access
            to an MVC within a 120 minute drive time.

         Streamlined MVCs were distributed to locations where their
    size could best be utilized given Department of Transportation
    regulations, weather, terrain, and road conditions.

        There is one exception to the criteria. Ponce, Puerto Rico received
    a streamlined MVC due to the large National Guard and Reserve Component
    population. While these individuals may receive their initial
    demobilization processing in the continental United States, all follow
    up events are done in Puerto Rico.
        The Vet Center service mission is specific, unique, and purposely
    designed to address the needs of individuals readjusting to civilian
    life after service in or in support of combat operations, including
    those who experienced military sexual trauma.
        Since 2014, the focus for increasing access to Vet Center services
    has shifted from opening new ``brick and mortar'' Vet Centers to
    providing regularly scheduled services in Vet Center Outstations, with
    services available 40 hours per week using a small number of counselors
    and Community Access Points (CAP), with varying levels of service
    delivery dependent on community demand. These sites are located within
    the communities of underserved Veteran and Servicemember populations.
    Vet Centers are staffed with an average of 7 employees and incur
    overhead costs. Service delivery through Vet Center Outstations and
    Community Access Points are the most cost efficient methods to provide
    readjustment counseling in areas geographically distant with smaller,
    although significant, client populations. These areas simply do not
    justify a full Vet Center.
        Current State: As of the beginning of FY 2016, the program is
    operating 19 Vet Center Outstations with full-time services available.
    The program is operating 742 Community Access Points, with 401 sites
    offering services on a weekly basis, 189 sites offering services on a
    twice monthly basis, and 152 sites offering services on a monthly
    basis. As utilization increases/decreases the service level is adjusted
    accordingly.
        Ongoing Evaluation: In FY 2016, each of the 300 Vet Centers has
    been tasked with 2 evaluations:

        First, they must evaluate for appropriate service delivery levels
    at each of the existing Outstations/CAPs. This evaluation includes a
    targeted outreach plan to increase local awareness of service
    availability, including an advertised ``Open House'' and close
    collaboration with the local County Veteran Service Officer, local
    Veteran Service Organizations, and local Congressional office staffers.
    In addition, Readjustment Counseling Service, which oversees all Vet
    Centers, has developed and is implementing a plan to acquire broad
    access to professional media services for the overall purpose of
    increasing awareness and access to Vet Centers, and specifically
    targeting awareness of the local services available through Vet Center
    Outstations and CAPs.
        Second, each Vet Center has been tasked with identifying and
    implementing at least one new CAP in their catchment area this fiscal
    year. Funding is being made available for hiring additional staff at
    any site that does not have current staffing necessary to provide these
    services.
        Caregivers and other supports and services of PCAFC affected the
    perceived wellbeing of caregivers and their families.
        Aim 3 examined the use and value of the overall Caregiver Support
    Program and its component services to caregivers in either PCFAC or the
    Program of General Caregiver Support Services. The study design for Aim
    3 was a quantitatively-driven mixed method design, with qualitative
    semi-structured interview data, enhanced by survey findings. Survey
    data will describe frequency of use of services, ratings of
    helpfulness, and differences by individual and site-level
    characteristics (e.g., caregiver race, Veteran health status,
    geographic region, etc.). Interviews were utilized to inform
    interpretation of the quantitative findings and shed light on other
    important aspects of caregivers' experiences unanticipated with survey
    responses.
        Aim 4 complements the caregiver survey data on services used by
    detailing the full delivery costs of the Caregiver Support Program--
    personnel, programming (e.g., stipend, CHAMPVA), and supporting costs.
    Preliminary operational costs will be based on a survey of Caregiver
    Support Coordinators (CSCs), capturing how their time is allocated
    across the various components of the Caregiver Support Program which
    they deliver at VAMCs.
        Final results will be delivered in summer 2016 and will inform the
    Caregiver Support Program about its return on investment and provide
    information on best practices for improving its programs. Understanding
    the impacts of the Caregiver Support Program on caregivers, Veterans,
    and VHA is expected to provide the Caregiver Support Program with
    information about highest value programs and services and an evidence
    base upon which to make program and planning decisions which optimize
    services while continuing to meet the requirements of title I of Public
    Law 111-163.

        Question 6.  The budget justification for Medical Support and
    Compliance indicates funding for the Veterans Integrated Service
    Networks (VISN) headquarters as decreasing by $11 million from the
    appropriated amount for FY 2017. Recently, VA announced that the number
    of VISNs would be reduced from 21 to 18.
        A. Please provide the Committee with the number of FTE at each VISN
    headquarters, broken out by VISN and by general schedule or title 38
    positions.
        Response. See attached.

    ------------------------------------------------------------------------
                              Number of FTE General   Number of FTE Title 38
              VISN              Schedule Positions           Positions
    ------------------------------------------------------------------------
    1......................  33                       5
    2......................  51                       3
    4......................  41                       2
    5......................  41                       12
    6......................  39                       7
    7......................  48                       13
    8......................  46                       10
    9......................  48                       8.5
    10.....................  4                        80.56
    12.....................  34                       6
    15.....................  45                       11
    16.....................  --                       --
    17.....................  49                       4
    18.....................  23                       11
    19.....................  40                       16.25
    20.....................  48                       11
    21.....................  41.5                     8.2
    22.....................  41                       8
    23.....................  41                       11
    ------------------------------------------------------------------------

        B. Please provide a detailed plan to reduce the number of VISNs to
    18 and a justification why 18 is the appropriate number of VISNs
    needed.
        Response. With the goal of modifying the existing Veteran
    Integrated Service Network (VISN) structure to bring it in line with
    MyVA districts, a VHA workgroup comprised of Network Directors and
    relevant Program Office Directors explored options and models and
    determined that 18 is the appropriate number of VISNs. Several factors
    were weighed in the process, including alignment with state boundaries,
    and the number of healthcare systems within each VISN. Realignment
    within state boundaries allows for better collaboration and interaction
    with various political representatives, state officials, agencies, and
    VSOs. Realignment into 18 VISNs allows for a more reasonable span of
    control, with 6-11 health care systems in the majority of the VISNs,
    while simultaneously reducing variation in Veteran population,
    enrollees, users, and budget. Eighteen VISNs will allow for better
    collaboration, standardization, and sharing of best practices, while
    not increasing span of control beyond 6-11 health care systems.

                        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Question 7.  The budget justification for Medical Support and
    Compliance indicates a decrease of approximately $35 million from the
    FY 2017 appropriated level for VHA Central Office (VHACO).
        A. Please provide the Committee with a detailed justification for
    the decrease in funding for VHACO.
        Response. For the past three fiscal years (FY 2013-2015), VHA has
    seen decreases in VHA Central Office (VHACO) actuals and has re-
    estimated the out year projections accordingly. These reductions
    reflect Congressional rescissions (see below ``Rescissions, FY 2013-FY
    2015'') on overall funding including rescissions to the Medical Support
    and Compliance (MS&C) appropriation in the provision of 2-year funding
    in the budget year (see below example Public Law 113-76, Section 226).
    Because of an identified need for MS&C funding at the VA medical
    centers (VAMCs), and to help address the recent access crisis, the
    reductions to this appropriation were imposed on VHACO rather than
    field organizations.

                          Rescissions, FY 2013-FY 2015
                             (dollars in thousands)
    ------------------------------------------------------------------------
    Fiscal                                                        Rescission
     Year                Public Law (PL)                 PL #       Amount
    ------------------------------------------------------------------------
      2013Consolidated and Further Continuing         113-6      ($2,039)
           Appropriations Act, 2013
      2014Consolidated Appropriations Act, 2014       113-76    ($50,000)
      2015Consolidated and Further Continuing         113-235    ($5,609)
           Appropriations Act, 2015
    ------------------------------------------------------------------------

                         Public Law 113-76, Section 226
        Sec. 226. (a) of the funds appropriated in division E of Public Law
    113-6, the following amounts which became available on October 1, 2013,
    are hereby rescinded from the following accounts in the amounts
    specified:
              (1) ``Department of Veterans Affairs, Medical Services'',
            $1,400,000,000.
              (2) ``Department of Veterans Affairs, Medical Support and
            Compliance'', $150,000,000.
              (3) ``Department of Veterans Affairs, Medical Facilities'',
            $250,000,000.
        (b) In addition to amounts provided elsewhere in this Act, an
    additional amount is appropriated to the following accounts in the
    amounts specified to remain available until September 30, 2015:
              (1) ``Department of Veterans Affairs, Medical Services'',
            $1,400,000,000.
              (2) ``Department of Veterans Affairs, Medical Support and
            Compliance'', $100,000,000.
              (3) ``Department of Veterans Affairs, Medical Facilities'',
            $250,000,000.

    In addition, the 2016 amount reflects the request for an adjustment to
    the Advance Appropriation of $69.96 million that was not approved in
    the final enacted appropriation. The reduction of $35 million reflected
    in the most current submission for FY 2017 continues those projections,
    as the FY 2015 actual was $52.6 million less than the previous year
    (see ``VHA Central Office Obligations).

        B. Please provide the Committee with the number of FTE at VHACO the
    FY 2017 and FY 2018 budgets would support if this budget was adopted.
    Please indicate the number of title 5 employees and the number of title
    38 or hybrid-title 38 employees.
        Response. See table below.

                        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               homeless veterans
        Question 8.  In the last several years, there has been significant
    momentum in efforts to end veteran homelessness. As the Secretary's
    testimony mentioned, veteran homelessness has declined by 36 percent
    since 2009.
        A. How does the budget request help focus efforts on those who are
    most difficult to reach, in addition to those who are at risk for
    homelessness?
        Response. VA's commitment to preventing and ending Veteran
    homelessness remains firm. VA will continue until the goal of all
    Veterans having permanent, sustainable housing with access to high-
    quality health care and other supportive services is met. VA provides a
    seamless continuum of services for Veterans who are homeless or at risk
    of homelessness. While significant advances have been made in reducing
    Veteran homelessness, there are sub-populations of homeless Veterans
    who are hard to reach and engage in services (i.e., chronically
    homeless, those with serious mental illness and justice involved). The
    2017 President's Budget includes $1.6 billion for VA programs that
    prevent or end homelessness among Veterans including, funding for case
    management support for the nearly 80,000 existing Housing and Urban
    Development-VA Supportive Housing (HUD-VASH) vouchers, grant funding
    for community-based prevention, and rapid rehousing services provided
    through the Supportive Services for Veteran Families (SSVF) program,
    clinical outreach and treatment services through Health Care for
    Homeless Veterans (HCHV), service intensive transitional housing
    through the Grant and Per Diem (GPD) and prevention services to justice
    involved Veterans in the Veteran Justice Program (VJP); and employment
    supports. These funds are critical to ensure that once communities meet
    the goal of ending Veterans homelessness they will be able to sustain
    it and not jeopardize the progress to date or recreate the levels of
    homelessness among Veterans prior to the investment.
        VA has made unprecedented efforts to promote the services available
    to Veterans who are homeless or might become homeless. A continuum of
    services has been designed to assist every eligible homeless Veteran,
    as well as Veterans at risk for homelessness. This homeless continuum
    assists Veterans in acquiring safe housing, treatment services,
    clinical outreach, opportunities to return to employment, prevention
    and rapid re-housing, and benefits assistance. As a result of these
    efforts, VA is serving more Veterans than ever before with specialized
    services for Veterans who are homeless or at risk of homelessness.
    Since 2010, demand for VA homeless-related services has increased by
    136 percent. There has been a year to date, 8.4-percent increased
    demand for homeless services between January 2015 and January 2016
    (January 2015: 164,224; January 2016: 178,139).\1\
    ---------------------------------------------------------------------------
        \1\ Due to enhanced data capture from VA and community providers
    and continued refinement of VA's data systems homeless data is
    constantly refreshed which may cause changes in previously reported
    data. Updates to homeless data are reflected in monthly refreshes of VA
    data systems.
    ---------------------------------------------------------------------------
        Since 2010, more than 365,000 Veterans and their family members
    have been permanently housed, rapidly rehoused, or prevented from
    falling into homelessness as a result of VA's homeless continuum of
    services and targeted community resources. In FY 2015 alone, nearly
    65,000 Veterans obtained permanent housing through VA Homeless Programs
    (FY 2014: 50,730), and more than 36,000 Veterans and their family
    members were prevented from becoming homeless through the SSVF program,
    including 6,555 children. VA's ability to partner HUD, the U.S.
    Interagency Council on Homelessness, other Federal agencies, state and
    local governments, and volunteer organizations all contributed to this
    significant accomplishment.
        VA's programs serving homeless and at-risk Veterans, are outlined
    below:

        The HUD-VASH program subscribes to the principles of the ``Housing
    First'' model of care, an evidence based practice model, helps homeless
    individuals exit from homelessness, remain in stable housing, thus
    improving ability and motivation to engage in treatment strategies.
    This program has been successful at rapidly moving individuals into
    housing and then providing wrap around supportive services as needed.
    Program goals include housing stability while promoting maximum Veteran
    recovery and independence in the community for the Veteran and the
    Veteran's family. The HUD-VASH program targets the most difficult to
    reach and prioritizes chronically homeless Veterans. In FY 2015, more
    than 18,200 chronically homeless Veterans were admitted to HUD-VASH
    case management services.
        SSVF is designed to rapidly re-house homeless Veteran families and
    prevent homelessness for those at imminent risk due to a housing
    crisis. Funds are granted to private, non-profit organizations and
    consumer cooperatives that will assist very low-income Veteran families
    by providing a range of supportive services designed to promote housing
    stability. In FY 2015, SSVF assisted nearly 99,000 Veterans and their
    family members (over 157,400 individuals), which included over 18,200
    households with children (over 34,600 children). SSVF has the unique
    ability to shift funds from the rapid re-housing of homeless Veteran
    families to preventing homelessness for those at-risk. This allows SSVF
    to adapt to changing local needs and emphasize prevention assistance
    where local communities have met the Federal benchmarks to end
    homelessness.
        The HCHV program is our primary clinical outreach program to engage
    the most difficult to reach homeless Veterans and provide street
    outreach to these Veterans. In addition, case management and HCHV
    Contract Residential Services ensure that chronically homeless
    Veterans, especially those with serious mental health diagnoses and/or
    substance use disorders, are connected to health care and other needed
    services. Veterans are placed in VA or community-based programs that
    provide quality housing and services that meet the needs of these
    special populations.
        The GPD program plays a vital role in the continuum of homeless
    services by providing supportive services to those Veterans who would
    otherwise be among the unsheltered homeless population, and ultimately
    transitioning them to permanent housing. Grants offered by the GPD
    program promote the development and provision of supportive housing
    and/or supportive services with the goal of helping homeless Veterans
    achieve residential stability, increase their skill levels and/or
    income, and realize greater self-determination. The GPD program has
    more than 650 funding projects and over 14,500 beds nationwide. During
    FY 2015, 15,507 Veterans exited GPD programs with permanent housing
    placements.
        The VJP and the Health Care for Re-Entry Veterans (HCRV) are
    designed to target Veterans who are at great risk of becoming homeless
    due to involvement with the justice system. The Veteran Justice
    Outreach (VJO) Specialists conduct face-to-face outreach in 1,284 local
    jails (39 percent of the U.S. total), and staff nearly the entire
    Nation's Veteran Treatment Courts and other Veteran-focused courts. VJO
    Specialists have served over 120,000 justice-involved Veterans since FY
    2010, including 46,534 Veterans in FY 2015.
        The HCRV Specialists provide outreach to Veterans approaching
    release from State and Federal prisons. They briefly assess reentry
    Veterans' probable treatment needs, help the Veterans plan to access
    responsive services upon release, and provide post-release follow-up as
    needed to ensure Veterans are engaged with services to prevent
    homelessness. There are currently 44 HCRV Specialist positions
    nationwide, almost all of which are funded through Veterans Equitable
    Resource Allocation. While many are based at VAMCs, but they typically
    serve Veterans in areas much larger than a VAMC catchment, often
    conducting outreach to prison facilities in at least one entire State,
    and sometimes an entire VISN. Nationally, HCRV Specialists served over
    72,000 re-entry Veterans since FY 2007, including 15,580 in FY 2015.
        Low Demand/Safe Havens (LDSH) are a 24-hour per day/7-days per week
    community-based early recovery model of supportive housing that serves
    hard-to-reach homeless Veterans with severe mental illness who have
    been unable to participate in traditional treatment and supportive
    services. Four LDSH sites were funded as pilot programs in FY 2012 as
    development projects under the National Center for Homelessness among
    Veterans (NCHAV) with funding support made available through HCHV.
    Outcomes of fidelity reviews conducted by NCHAV warranted expansion of
    the model program to include an additional 18 sites in FY 2013 for
    chronically homeless Veterans with concurrent mental illness and
    substance use disorders.
        Homeless and at-risk Veterans also need access to employment
    opportunities to support their housing needs, improve the quality of
    their lives, and assist in their community reintegration efforts. The
    Homeless Veteran Community Employment Services (HVCES) program is the
    only employment program within VHA that specifically targets homeless
    Veterans. In FY 2015, the number of Veterans exiting homeless
    residential programs with employment (GPD, CWT/TR, and DCHV) increased
    by 9 percent. Continued investment in VA's homeless programs is needed
    to sustain the capacity to address the housing needs of Veterans and
    maintain the systems put in place to prevent homelessness.

        B. As the number declines, what is the vision for the future of VA
    homelessness programs?
        Response. VA's vision for ending homelessness among Veterans is to
    continue developing a systematic approach in communities whereby any
    Veteran experiencing a housing crisis may receive the housing and
    services they need to end their crisis as quickly as possible, while
    preventing those who are at risk from ever falling into homelessness.
    These systems enable communities to create a multi-pronged approach
    addressing the varying health and social situations experienced by
    Veterans and their families. These approaches must address Veterans
    with an acute housing crisis, as well as those Veterans who are at risk
    of homelessness; recovering from a chronic housing crisis; or chronic
    health, mental health, and substance use issues. VA and communities
    must have the systems and services in place to sustain and maintain
    access to permanent, sustainable housing, high quality health care and
    other supportive services.
        Ending Veteran homelessness does not mean that a Veteran will never
    again experience a housing crisis. At any given time, a Veteran may
    become homeless as a result of challenges in their lives. VA's goal is
    to make these challenges rare, brief and non-recurring. As homelessness
    among Veterans declines and the needs of Veterans change, VA will shift
    with the changing needs of Veterans and communities and increase the
    focus on preventing those who are at risk while maintaining Veterans
    who are already housed.
        VA and Federal partners are pleased by the successes being realized
    across the country. As of April 15, 2016, 23 communities, the State of
    Connecticut, and the Commonwealth of Virginia have announced an
    effective end to Veteran homelessness. In order to remain successful,
    VA and communities need to be able to sustain the gains that have been
    made.
        VA's vision is based on data collection and research. This approach
    provides valuable insight into the causes of Veteran homelessness,
    evidence based practices, and projecting the needs and changing
    demographics of Veterans. The results of these efforts will allow VA to
    continue to refine and target homeless programs to best prepare for
    increasing numbers of female Veterans, returning combat Veterans, as
    well as other changes in our Veteran population.

        C. What potential changes may be needed in the future to ensure the
    program size and services are appropriate for the level of need?
        Response. As VA, Federal, and community partners advance toward the
    goal of preventing and ending Veteran homelessness and the landscape of
    needs and services change, it is important to make certain that the
    housing resources and supportive services in each community are best
    suited to ensuring that homelessness among Veterans is rare, brief, and
    non-recurring. As the needs of homeless and at-risk Veterans evolve, VA
    will continue to transition its focus from ``rescue'' (i.e., outreach
    and support) to those seeking housing, to long-term case management of
    those trying to sustain housing and to prevention efforts. It is
    important to note that the target populations for VA homeless services
    are Veterans who are chronically homeless and/or have mental and
    physical health concerns. These Veterans require long-term, often
    intensive, case management and other clinical services that will
    prevent them from returning to homelessness. Therefore, once Veterans
    are permanently housed, VA will need to continue to provide the wrap
    around services necessary to ensure housing stability for the Veteran
    and their family.
        Through its research and data collection, VA continues to evaluate
    and monitor the needs of homeless and at-risk Veterans to ensure that
    those needs are being met. The areas where there have been large gains
    in ending Veteran homelessness have been in places that have benefited
    from targeted investment of resources. Conversely, areas where gains
    have been lost were in places where the focus shifted to other
    priorities. In order to sustain the gains and ensure that resources are
    allocated efficiently, VA will require flexibility in its
    authorization(s) to transition services at a level commensurate with
    the population shift (from literally homeless to at-risk) and
    geographic needs.
        In addition to the allocation of resources to meet targeted need,
    VA is focusing on three areas to enhance homeless services:
    programmatic transformation in the GPD program, adoption of Coordinated
    Entry Systems and the use of ``By Name Lists'' (BNLs), and maximum
    utilization of all HUD-VASH vouchers. Additionally, VA conducts
    research to inform the development of evidence-based services that meet
    the needs of various special populations.
        GPD Programmatic Transformation: The GPD Program has been VA's
    primary transitional housing program for over twenty years. As VA has
    added programs to the homeless continuum of services, and homelessness
    has decreased, it is clear that the GPD program must be refreshed to
    keep pace. VA is exploring an overall program refresh to allow VA to
    make GPD more efficient and effective as well as responsive to Veteran
    needs in their respective communities.
        In addition, VA has challenged GPD grantees to assess their
    programs and think about strategies that are currently available to
    them address needed changes. One option is to ask grantees to consider
    if Bridge Housing could work in their community. Provided below is a
    copy of the guidance VA issued to GPD grantees via an Open Letter on
    March 1, 2016 (see below).

                        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Coordinated Entry Systems and the use of ``By Name Lists'' (BNLs):
    A vital strategy in the Federal approach to ending homelessness is the
    adoption of Coordinated Entry Systems and the use of BNLs. These
    approaches require the ability to share Veteran Protected Health
    Information with community partners in order to develop a fully
    comprehensive BNL and ensure that all homeless Veterans are prioritized
    for services in the community. VA is working to identify and implement
    secure methods for the digital sharing and storage of Veteran
    information in a way that dually maximizes Veteran security and
    community-level coordination of services.
        Maximum use of HUD-VASH vouchers: VA is working internally and with
    its Federal partners at HUD and USICH to ensure that we maximize
    utilization of all HUD-VASH vouchers. Efforts underway within HUD-VASH
    include targeted allocations for Veterans on Tribal lands and in rural
    areas, increased use of project-based vouchers, as well as exploratory
    discussions regarding vouchers for Other Than Honorable Veterans.
    Concurrently, VA is working on several HUD-VASH accelerator projects
    focused on cities with low vacancy rates and a backlog of voucher
    holders seeking housing. Ensuring that Veterans have the case
    management support in place as they exit homelessness is a critical
    component of this process. Continued investment in case managers (e.g.,
    10,000 newly funded HUD-VASH vouchers) through funding provides
    Veterans with the access and quality services to successfully exit
    homelessness.
        Research: VA recognizes that research is critical to informing the
    development of evidenced-based services that meet the needs of various
    special populations (e.g., aging, women, Operation Enduring Freedom/
    Operation Iraqi Freedom/Operation New Dawn, the chronically homeless).
    VA's National Center on Homelessness among Veterans is VA's hub for
    homeless Veteran research. For example, the National Center on
    Homelessness hosted several Homeless Evidence and Research Synthesis
    (HERS) symposiums bringing together policymakers, leaders in the field
    and researchers to discuss various evidence based practices and
    solutions.
        The final proceeding documents from previous HERS symposiums are
    embedded. These documents highlight the presentations, discussions and
    suggested recommendations from the events. Opinions expressed in these
    papers are provided to be thought provoking and challenging, as
    national policy are developed to address the needs of homeless
    Veterans. These recommendations do not reflect the current official VA
    policy.

                        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        In summary, the strategies outlined above are critical to ensuring
    that programs and services match Veteran need. Evidence and data show
    the importance of strategically aligning housing resources in such a
    manner as to create a crisis response system that quickly resolves an
    individual's or family's homelessness by providing the appropriate
    permanent housing option along with the necessary supports. Achieving
    such alignment challenges the provider community at all levels to
    develop new approaches and refine existing programs that are cost
    effective and in line with proven best practices.

        Question 9.  One of the ``Breakthrough Outcomes for 2016'' is to
    ``continue progress toward an effective end to veteran homelessness by
    permanently housing or preventing homelessness for an additional
    100,000 veterans and their family members.''
        A. What is the total number of veterans for whom VA intends to
    provide permanent housing or prevent homelessness in 2016?
        Response. In FY 2015, nearly 65,000 homeless Veterans were
    permanently housed through VA's homeless programs. After including
    their family members, that number increased to over 100,000.
        Based on previous year's performance, VA expects to permanently
    house or prevent from homelessness approximately 100,000 people in
    2016. This number includes Veterans and their family members. Out of
    100,000 people, VA projects that approximately 73,000 Veterans will
    obtain permanent housing or be prevented from homelessness at exit from
    a VA homeless program.

        B. Of this number, how many does VA intend to place in permanent
    housing?
        Response. VA anticipates that all of the Veterans referenced above
    will be permanently housed or maintained in permanent housing. Veterans
    could be placed in permanent housing from any of VHA's homeless
    programs (HUD-VASH, SSVF, GPD, HCHV, Domiciliary Care for Homeless
    Veterans (DCHV), Compensated Work Therapy/Transitional Residence
    program (CWT/TR), and the justice programs).

        C. How many would be placed in transitional housing?
        Response. Transitional housing is not part of the Breakthrough
    Outcomes for 2016; however, transitional housing, available through the
    GPD program, will remain part of VA's continuum of homeless services.
    In FY 2015, 23,894 Veterans entered GPD programs, and there were 15,727
    exits to permanent housing. Through February 2016, there have been
    9,760 entries into GPD funded programs. During the same period, there
    have been 6,813 exits to permanent housing. It is anticipated that the
    use of VA transitional housing through the ``bridge housing'' model
    will increase the overall utilization of VA funded projects.

        D. How many would benefit from prevention services?
        Response. VHA implemented a national, health system-based universal
    screen for homelessness and risk of homelessness. The goal of this
    screener is to enhance the rapid identification of Veterans who very
    recently became homeless or are at imminent risk of homelessness, and
    to ensure that they access appropriate assistance to achieve housing
    stability. This instrument is administered by providers during
    Veterans' outpatient visits at VHA facilities across the country.
        During FY 2015, 3,529,695 Veterans responded to VHA's screener for
    homelessness and risk. Of those, 0.65 percent (n=23,103) screened
    positive for homelessness and 0.57 percent (n=20,230) screened positive
    for risk. Approximately three out of five Veterans who screened
    positive for homelessness or risk requested follow-up services to
    address their housing instability. Among Veterans who requested follow-
    up, 71.5 percent of those who screened positive for homelessness, and
    65.1 percent of those who screened positive for risk received a follow-
    up service within 30 days.
        Between the first quarter of FY 2013--when screening for
    homelessness and risk began--and the fourth quarter of FY 2015, the
    proportion of Veterans who screened positive for homelessness decreased
    by 32.9 percent and the rate of positive screens for risk decreased by
    57.8 percent. Of the Veterans who initially screened positive for
    either homelessness or risk and responded to a rescreen at least 6
    months later, 74.6 percent resolved their housing instability, and 92.1
    percent of Veterans who reported risk of homelessness screened negative
    during the subsequent screen.\2\
    ---------------------------------------------------------------------------
        \2\ Data as of March 31, 2016. Due to enhanced data capture from VA
    and community providers and continued refinement of VA's data systems,
    homeless data is constantly refreshed, which may cause changes in
    previously reported data. Updates to homeless data are reflected in
    monthly refreshes of VA data systems.

        E. How was this goal determined?
        Response. VA believes the goal of permanently housing or preventing
    homelessness for an additional 100,000 Veterans and their family
    members represents the best direct measurement of the initiative's
    national impact. The specific target of 100,000 was determined by
    examining the number of Veterans and family members permanently housed
    or prevented from homelessness in 2015 to establish a baseline for this
    measure. In 2015, the number of Veterans and family members permanently
    housed or prevented from homelessness was approximately 118,000.
    Because 2015 included several temporary ``surge efforts'' that
    generated large numbers of permanent housing placements that level of
    placements is unlikely to be repeated in 2016. Additionally VA's
    Homeless Gap Analysis model projects the 2016 homeless Veteran
    population to drop approximately 16 percent from 2015 levels; 100,000
    is therefore a cautiously ambitious target for 2016.

        Question 10.  The written testimony indicates that, in FY 2015, VA
    provided services to more than 365,000 homeless or at-risk veterans
    through VHA homeless programs. Please list how many veterans have been
    served through VHA homeless programs for each fiscal year, beginning
    with FY 2010.
        Response. VA has made unprecedented efforts in engaging, reaching
    and serving Veterans who are homeless or might become homeless. The
    Secretary's testimony references that in FY 2015, more than 365,000
    homeless or at-risk Veterans served through VHA's homeless programs.
    This number represents the total number of homeless and at-risk
    Veterans served in VHA and the Veterans Benefits Administration (VBA).
    The following chart outlines the total number of homeless and at-risk
    Veterans served by VA by fiscal year.\3\
    ---------------------------------------------------------------------------
        \3\ Data as of March 31, 2016. Due to enhanced data capture from VA
    and community providers and continued refinement of VA's data systems
    homeless data is constantly refreshed which may cause changes in
    previously reported data. Updates to homeless data are reflected in
    monthly refreshes of VA data systems.

    ------------------------------------------------------------------------
                                      Total number of homeless and at-risk
              Fiscal Year            Veterans served by VA (data as of March
                                                    31, 2016)
    ------------------------------------------------------------------------
    2015..........................  376,619
    2014..........................  367,798
    2013..........................  348,825
    2012..........................  236,942
    2011..........................  192,702
    2010..........................  160,927
    ------------------------------------------------------------------------

        Question 11.  What metrics are used to determine the number of
    those who are prevented from becoming homeless?
        Response. The SSVF program, VA's primary homelessness prevention
    program, offers grants to non-profit organizations to not only rapidly
    re-house Veterans and their families, but directs substantial efforts
    to preventing homelessness. The following metric is used to determine
    the number of those who are prevented from becoming homeless:

         How many at-risk Veteran families receive SSVF homeless
    prevention services, and of those served, how many maintained permanent
    housing upon program exit.

        The SSVF program tracks outcome measures specifically tied to
    preventing homelessness as it offers services specifically designed to
    keep at-risk Veterans and their families in permanent housing. Data
    used for this metric is acquired from the Homeless Management
    Information System (HMIS). HMIS data is input by SSVF grantees and
    community providers.
        VA's homeless programs have always had a dual focus on housing
    unsheltered (street) homeless Veterans and increasing exits to
    permanent housing of sheltered homeless Veterans. The homeless
    programs' continuum of services includes both prevention and treatment
    services to assist those Veterans who are on the streets or in shelters
    today, and prevention for those at risk of homelessness from starting
    that downward spiral. Although other VA programs may not have such a
    singular focus as SSVF, VA considers many programs along the continuum
    as offering and providing prevention services. The primary goal of HUD-
    VASH is to move Veterans and their families out of homelessness and
    into stable permanent housing (rescue), and then to provide the
    supports needed to sustain the Veteran and their family in their
    housing (prevention).
        VA also has several programs that provide time-limited housing to
    Veterans along with supportive services, treatment, vocational
    assistance, etc. These programs provide the necessary ``bridge''
    between streets and permanent housing by providing transitional
    residence (rescue) and services designed to improve housing stability
    that will give Veterans the supports necessary to avoid re-experiencing
    homelessness (prevention). VJP prevents homelessness by providing
    outreach and linkage to VA services for Veterans at early stages of the
    justice system and address the community re-entry needs of incarcerated
    Veterans in order to reduce the impact of medical, psychiatric, and
    substance abuse problems upon community readjustment. HVCES program
    provides services to both homeless and at-risk Veterans that increase
    access to employment opportunities to support their housing needs,
    improve the quality of their lives, and assist in their community
    reintegration efforts.
                         medical care collections fund
        Question 12.  The budget indicates that the VHA Chief Business
    Office has implemented an expanded revenue enhancement plan that
    focuses on immediate, mid-term, and long-term improvements to business
    processes.
        A. When was this plan implemented?
        Response. The VHA Chief Business Office has historically adapted
    the expanded revenue enhancement plan that resulted in several key
    initiatives leading to improvements in revenue. The broader plan has
    resulted in several key initiatives and improvements including:

         Implementation of seven industry-modeled regional
    Consolidated Patient Accounting Centers (CPAC) standardizing and
    optimizing the billing and collections activity from 153 VAMCs;
    completed in FY 2012.
         Electronic denials management
         Implementation of electronic payments and remittance
    advices
         Electronic Pharmacy claims
         Establishment of a National Payer Relations Office

        B. What are the targeted improvements included in the plan?
        Response. Ongoing Key Revenue Operations initiatives include:

         Sustain and enhance Revenue Operations
         Maximize use of Payer Relations Office--conducting new or
    re-verifications of existing third party agreements. Implementation of
    a payer compliance tool that supports management oversight of insurance
    companies' compliance with established agreements.
         Continued work through legislative proposals to maximize
    revenue. Examples include recognizing VA as a participating provider,
    aligning with best practices on collection of health information
    exchange.
         Optimize business process through effective use of
    technology and advanced business analytics.
         Attract, develop, and retain skilled, engaged and
    empowered workforce.
         Develop and enhance technology to standardize and automate
    business rules and create efficiency.
         Implementation of Lean and Lean Six Sigma (Lean/LSS),
    continuous process improvement program. Tracking well in year 4 of a 5-
    year maturity model.
         Planned implementation of Tiered Medication Copayment
    System.

        C. Is there a timeline over which the improvements will be pursued?

        D. How has this plan impacted collections?
        Response (C&D). While not all initiatives are directly tied to
    impact collections, the implementation of CPACs has resulted in
    substantial improvements to total collections. A 23-percent increase in
    total Medical Care Collection Fund (MCCF) collections was realized from
    FY 2012 to FY 2015. Other benefits achieved through consolidation are:

         Standardized, consistent and stable performance leading to
    stronger collections across all VAMCs
         Industry best practice internal control framework
    proactively prepares and positively positions CPAC for future audits
         Deployed LEAN/LSS across the CPACs supporting employee
    engagement, informed decisionmaking and an organizational change
    management approach that supports the CPAC infrastructure.

        Question 13.  VA is projecting an increase in Medical Care
    Collections Fund collections in 2016. Please explain, in detail, what
    factors contribute to the projected increase.
        Response. VHA utilizes the Integrated Collections Forecasting Model
    (ICFM) to estimate the 10-year collections as an input to the
    President's Budget. ICFM draws upon numerous predictive variables and
    historical data sources to forecast collections. Based on the model
    updates at the time of budget development, ICFM projected an increase
    of $87.5M in the MCCF for FY 2016. These estimates were not further
    adjusted for additional policy considerations such as the impact of
    Veteran Choice Program.
        The projected increase is due the net impact of the following:

         A FY 2015 collections baseline of $3.451B;
         Projected workload growth from FY 2014 Enrollee Health
    Care Projection Model (EHCPM) resulting in higher bill volumes;
         Anticipated increases to third party reasonable charges
    with a stable collections to billing ratio
                                   caregivers
        Question 14.  The 2016-2018 ``Future Goals'' for the Caregivers
    Program indicate supporting the evaluation of program components under
    the Caregivers and Veterans Omnibus Health Services Act of 2010 through
    the Partnership Evaluation Center. Please explain, in detail, what
    aspects of the program will be evaluated, how they will be evaluated,
    and how VA will use the evaluation results to make improvements to the
    program.
        Response. The Caregiver Support Program National Office has
    partnered with VHA's Health Services Research and Development Service
    Quality Evaluation Research Initiative to collaboratively fund the VA
    Caregiver Support Program Partnered Evaluation Center (VA-CARES), a
    long-term project that will use a mixed methods approach to provide an
    evaluation of short- term impacts of the Caregiver Support Program. The
    research study is organized into four Aims, described below.

        In Aim 1, VA-CARES closely examined health care utilization through
    an analysis of medical records for VA-provided and VHA purchased care,
    comparing health care utilization of Veterans whose caregivers are
    participating in the Program of Comprehensive Assistance for Family
    Caregivers (PCAFC) to healthcare utilization of a control group, one
    year prior to and up to three years following application to PCAFC.
        Aim 2 considers caregiver well-being. VA-CARES distributed surveys
    to caregivers to assess how training, the stipend for eligible primary
    family caregivers, and other supports and services of PCAFC affected
    the perceived wellbeing of caregivers and their families.
        Aim 3 examined the use and value of the overall Caregiver Support
    Program and its component services to caregivers in either PCFAC or the
    Program of General Caregiver Support Services. The study design for Aim
    3 was a quantitatively-driven mixed method design, with qualitative
    semi-structured interview data, enhanced by survey findings. Survey
    data will describe frequency of use of services, ratings of
    helpfulness, and differences by individual and site-level
    characteristics (e.g., caregiver race, Veteran health status,
    geographic region, etc.). Interviews were utilized to inform
    interpretation of the quantitative findings and shed light on other
    important aspects of caregivers' experiences unanticipated with survey
    responses.
        Aim 4 complements the caregiver survey data on services used by
    detailing the full delivery costs of the Caregiver Support Program--
    personnel, programming (e.g., stipend, CHAMPVA), and supporting costs.
    Preliminary operational costs will be based on a survey of Caregiver
    Support Coordinators (CSCs), capturing how their time is allocated
    across the various components of the Caregiver Support Program which
    they deliver at VAMCs.
        Final results will be delivered in summer 2016 and will inform the
    Caregiver Support Program about its return on investment and provide
    information on best practices for improving its programs. Understanding
    the impacts of the Caregiver Support Program on caregivers, Veterans,
    and VHA is expected to provide the Caregiver Support Program with
    information about highest value programs and services and an evidence
    base upon which to make program and planning decisions which optimize
    services while continuing to meet the requirements of title I of Public
    Law 111-163.
              health professionals educational assistance program
        Question 15.  Please list the top five positions for which benefits
    under the Health Professionals Educational Assistance Program,
    including the Education Debt Reduction Program, the Employee Incentive
    Scholarship Program, and the Health Professional Scholarship Program,
    were used in 2015 and how much funding went toward each position. What
    are the projections for 2016?
        Response. The Education Debt Reduction Program (EDRP) is a critical
    tool for recruiting physicians and other direct health care providers
    to work with VHA. VHA has the authority to offer education debt
    reduction payments for employees with qualifying loans for positions
    that are determined to be difficult for recruitment and retention based
    on local facility needs. Participants receive education debt reduction
    payments up to a maximum award amount of $120,000 over 5 years while
    they remain employed by VHA in a position that qualified them for the
    award.
        The following table shows the top five occupations for which new
    awards were approved in FY 2015 and the total award amounts projected
    for the associated awards. These participants are currently serving in
    their first service period and will receive their first EDRP
    reimbursement in FY 2016. VHA projects to offer a minimum of 900
    additional new awards this year, primarily in the occupations
    designated as mission critical by VA: physicians, nursing, psychology,
    physician assistant, and physical therapy.
        The average award amounts and overall funding needs of the program
    are increasing under the new maximum award amount of $120K (or $24K per
    year). In FY 2014, VHA made approximately 650 new awards, bringing the
    total number of EDRP participants to over 2,000. In FY 2015, EDRP
    reimbursed those participants nearly $11M (participants in these years
    were at the pre-VACAA maximum award amount of $12K per year or less).
    VHA anticipates reimbursing the current participants nearly $23M in FY
    2016, and $37M in FY 2017 based on the increase in program participants
    and average award amounts.

                                     FY 2015
                                  (New Awards)
    ------------------------------------------------------------------------
                      Occupation                   Participants    Funding
    ------------------------------------------------------------------------
    Medical Officer..............................       307      $30,120,574
    Nurse........................................       210       $9,313,726
    Pharmacist...................................       102       $9,447,553
    Psychologist.................................        79       $6,949,085
    Physician Assistant..........................        43       $3,875,563
    ------------------------------------------------------------------------

        The Employee Incentive Scholarship Program authorizes VA to award
    scholarships to employees pursuing degrees or training in health care
    disciplines for which recruitment and retention of qualified personnel
    is difficult. Participation in the program is field-driven and
    dependent on the number of employees recommended by facilities. The
    following table shows the top five occupations for which new awards
    were approved and will result in a service obligation period in those
    occupations. At the time of this report, VHA is conducting its second
    FY 2016 Application Cycle, and therefore, the FY 2016 figures below
    reflect only the new applications submitted and approved through
    October 31, 2015.

                                     FY 2015
                                  (New Awards)
    ------------------------------------------------------------------------
                      Occupation                   Participants    Funding
    ------------------------------------------------------------------------
    Registered Nurse (includes NP, CNS, aNd CNL).     1,234      $22,370,753
    Licensed Practical/Vocational Nurse..........        11         $156,059
    Physical Therapist...........................         7          $76,897
    Pharmacist...................................         5         $131,096
    Social Worker................................         5         $111,064
    ------------------------------------------------------------------------

                                     FY 2016
                       (New Awards--through Oct 31, 2015)
    ------------------------------------------------------------------------
                      Occupation                   Participants    Funding
    ------------------------------------------------------------------------
    Registered Nurse (includes NP, CNS, and CNL).       610      $11,202,684
    Licensed Practical/Vocational Nurse..........         8         $103,646
    Physical Therapist...........................         8         $109,397
    Physician Assistant..........................         4          $80,756
    Occupational Therapist.......................         3          $59,854
    ------------------------------------------------------------------------

        Health Professionals Scholarship Program awards scholarships to VA
    and non-VA employees pursuing degrees of training in health care
    disciplines for which recruitment and retention of qualified personnel
    is difficult. Scholarship covers tuition, stipend and required fees;
    recipients are required to complete a service obligation at a VA health
    care facility after program completion. Health Professional Scholarship
    Program is currently accepting applications for Registered Nurses
    (including Nurse Practitioners). We anticipate that we will award 25
    scholarships.
                        construction and capital assets
        Question 16.  The budget notes that VA currently has 370 buildings
    that are vacant or less than 50 percent occupied, which costs VA $26
    million annually to maintain and operate. Please provide a list of
    these buildings.
        Response. The list is attached. The list is comprised of buildings
    that were predominantly vacant (more than 50 percent) at the end of FY
    2015. Most of the buildings are currently being used for swing space,
    as VA considers reuse alternatives or disposal options.

                        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Question 17.  The FY 2017 budget requests $528 million in major
    construction to fund projects in Long Beach, California, and Reno,
    Nevada. The US Army Corps of Engineers (USACE) will be the construction
    agent for these two projects as now required by law for any project
    over $100 million. Please provide the Committee an update on the
    projects that USACE is the construction agent, to include the Denver
    project.
        Response. The Department of Veterans Affairs (VA) has entered into
    a master interagency agreement with the U.S. Army Corps of Engineers
    (USACE) to collaborate on 14 construction projects. USACE will have the
    lead in the execution of design and construction on the 14 projects.
    USACE has provided an approach to gaining insight and validation of all
    VA completed work prior to assuming the lead. The attached addendum
    outlines the process and provides the status of the agreement for each
    project.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Question 18.  The FY 2017 budget requests $30.2 million for the
    project in Long Beach, California, and states that this funding will be
    used for the construction of a Combined Heat and Power plant (CHP).
    Please provide details on the CHP, including a break out of the $30.2
    million for the project.
        Response. The FY 2017 budget requests $30.2 million for a proposed
    cogeneration (Combined Heat and Power (CHP)) system for the VA Long
    Beach Medical Center. This Cogen system consists of a natural gas
    engine that generates electricity locally to provide supplemental
    electricity to the campus carrying approximately 40 percent of the
    campus load during peak demand periods and up to 90 percent during
    normal operations. This will result in significant energy cost savings,
    reduction in carbon emissions and increased reliability. Currently, all
    electricity is supplied by the local utility company, Southern
    California Edison. The byproduct (waste heat) from the engine will be
    captured and used to provide steam to operate the steam turbine of a
    proposed steam-driven chiller, in turn; the steam-driven chiller will
    provide chilled water for campus space cooling. A new building will be
    constructed to house the proposed CHP system. The proposed CHP system
    output capacity will be between 1 and 3 megawatts of electrical power.
    The proposed CHP system will provide the following benefits:

        1. Lower energy cost by using natural gas to generate electricity
    locally as opposed to that from a central power station.
        2. Lower operating cost by utilizing the waste heat to produce
    steam.
        3. Reduce the greenhouse gas emissions normally associated with
    electricity and steam production.
        4. Improve the reliability of electric and steam services for the
    campus.

        The total FY 2017 amount requested is $30.2 million. Of that
    amount, $25.9 million is dedicated to the production of the CHP
    construction documents, and actual construction. The remaining amount,
    $4.3 million, is required to demolish Buildings 128 and 133.

        Question 19.  In the hearing, Secretary McDonald mentioned VA's
    efforts regarding public-private partnerships for construction
    projects. Please provide an update on VA's efforts in this area,
    including an analysis of its feasibility and any legislative changes
    that would need to be made.
        Response. VA is assessing strategic partnerships as part of the
    MyVA initiative. Partnerships provide VA with opportunities to expand
    upon, and maximize the utility of, existing resources in several
    operational areas; including real estate. VA is presently evaluating
    potential locations in which a form of a public private partnership
    (P3) would be helpful.
        First, VA has been exploring a potential public private partnership
    in San Francisco, California. In order to address issues relating to
    aging infrastructure, the San Francisco VA Medical Center (SFVAMC) has
    received funding for a major seismic construction project, and needs
    several other funded projects. VA assessed the total life cycle of
    SFVAMC's approved capital investment plan, against the discounted
    present value of potential capital P3 alternatives in the market. VA
    believes that a P3 could make financial and practical sense toward
    achieving VA's mission. It could also enable VA to assess prospects for
    minimizing upfront capital funds, reducing overhead costs, focusing on
    healthcare outcomes, and fostering VA's ability to better engage
    community partners, and create jobs and tax revenues for the local
    economy.
        Given the infrastructure costs and challenges at VA's existing
    campus in San Francisco, VA has determined that a partnership could be
    an effective, viable opportunity. VA is working with the Office of
    Management and Budget to develop partnership options while continuing
    to support various legislative efforts.
        Second, in Omaha, Nebraska, VA has received partial funding for a
    major construction project but likely will not receive full funding in
    the near term. Concurrently, VA has been made aware of donors in the
    community that would like to help finance and then construct a needed
    facility, and donate that facility to VA. Therefore, VA is exploring a
    P3 opportunity related to the construction of a facility on VA land,
    built to Federal construction standards. It is anticipated that a P3 in
    this location could efficiently serve Veterans and taxpayers, while
    reducing the Government's outlay of capital dollars.
        VA would require legislation to support both of the aforementioned
    P3 options and would need to ensure that its proposed approach is
    consistent with[ * * * ]Omaha would likely require authority for VA to
    enter into a joint agreement for construction of a new medical facility
    (as defined by 38 U.S.C. Sec. 8101), with a suitable decisionmaking
    process. San Francisco would require approval to enter into a long-term
    partnership agreement, which could involve a lease to VA in excess of
    the current 20-year maximum. VA would also need to ensure the budgetary
    treatment of P3 projects were compliant with lease scoring rules under
    Office of Management and Budget Circular A-11.
        Importantly, unless and until VA obtains the required authority,
    and has an opportunity to solicit feedback from the market, VA will not
    be able to act on potential P3 opportunities.
                            compensation and pension
        Question 20.  The criteria for survivor compensation are outlined
    on page VBA-68 of the FY 2017 budget request and include this as one of
    the potential paths to benefits: ``[T]he Veteran was a former prisoner
    of war who died after September 30, 1999.'' Please clarify whether the
    September 1999 cutoff was used in VA's budget projections and whether
    it is used in determining eligibility for survivor compensation.
        Response. 38 U.S.C. Sec. 1318 governs the criteria for survivor
    compensation, also known as Dependency and Indemnity Compensation
    (DIC). Section 603 of the Veterans' Benefits Act of 2010, Public Law
    111-275 (October 13, 2010) removed the qualifying phrase, ``who died
    after September 30, 1999'' from 38 U.S.C. Sec. 1318(b)(3), effective
    October 1, 2011. Therefore, this cutoff date is not used in determining
    eligibility for DIC and also was not used in VA's budget projections.
    This cutoff date will be removed from the eligibility requirements in
    future budget submissions.
                        veterans benefits administration
        Question 21. The large number of appeals pending at VA--about
    440,000--is a serious concern.
        A. The Inspector General's office recently testified that, in order
    to reduce the backlog of disability claims, VA ``re-allocat[ed] staff
    to process only claims that affect the backlog while sacrificing other
    types of claims such as those on appeal.'' What steps is VA taking to
    ensure that processing appeals is a priority for the Veterans Benefits
    Administration?
        Response. VBA has received and completed record-breaking numbers of
    disability compensation rating claims in recent years, which has
    resulted in corresponding increases in the volume of appeals. Over the
    past 20 years, VA appeal rates have held steady between 11 and 12
    percent of the total volume of completed disability rating claims. VBA
    continues to prioritize rating claims as well as place additional focus
    on appeals. VBA is grateful for the funding that allowed us to hire 100
    appeals FTE in FY 2015 and 200 appeals FTE in FY 2016. This fiscal
    year, VBA increased its appeals workforce from 1,195 employees to over
    1,490 employees as of February 2016, and has allocated $10 million in
    overtime funds to support the appellate workload. VBA's process
    improvements, such as the Veterans Benefits Management System (VBMS)
    and the National Work Queue (currently being deployed) are providing
    increased efficiencies in the claim process, and we are also focused on
    leveraging our technology initiatives in support of modernizing the
    appeals process. In a very short period of time, the NWQ-led
    efficiencies have resulted in the reduction in claims pending initial
    development, reduction in cycle times for claims waiting for a rating
    decision, and an equitable distribution of claims pending award and
    authorization. However, VA will not be able to provide Veterans with
    timely decisions on their appeals without legislative reform to
    streamline and modernize the appeal process and additional resources to
    timely work the current inventory of appeals. Without congressional
    action to authorize a new appeal process and appropriate funding for
    additional appeals FTE, VA's appeals inventory will continue to grow
    and Veterans will have to wait much longer for a resolution of their
    appeals. VA is working to streamline the appeals process, an initiative
    that is one of VA's ``12 Breakthrough Priorities.'' In addition, a
    legislative proposal that VA developed with Veterans Service
    Organizations and other stakeholders is currently being considered in
    both the House of Representatives (H.R. 5083 and H.R. 5620) and the
    Senate (draft bill--SVAC Ranking Member Blumenthal).
        VA has brought together the Nation's leading Veteran advocacy
    groups for their input. They are our steadfast partners in improving
    the way we deliver services to Veterans.
        As a result of that collaboration, VA has put forward a new
    proposal that would provide veterans with a simple, fair, and
    transparent appeals process in which, with the appropriate resources
    provided by Congress in future appropriations, the vast majority would
    receive a final appeals decision within one year of filing an appeal by
    2021. This disentanglement of process is enabled by one crucial
    innovation--giving veterans multiple paths to adjudicate disputes on a
    claim, while preserving the effective date that the initial claim was
    filed. VA's consensus proposal was put forward as a discussion draft by
    Ranking Member Blumenthal and was the subject of the Committee's
    May 24, 2016, legislative hearing.
        This legislation would modernize the veteran appeals process,
    better serving veterans, taxpayers, and the Nation for years to come.

        B. Some prominent lawyers from Georgia have offered to organize
    attorneys from the American College of Trial Lawyers to volunteer their
    services to help resolve the appeals backlog. Will VA commit to closely
    examining possible options for them to help alleviate the backlog of
    appeals?
        Response. VA is committed to looking for ways to streamline and
    improve the appeals process.
        The Board has worked closely with the American Legion to find a way
    that the American College of Trial Lawyers (ACTL) can assist them in
    representing Veterans who present some of the most complex issues. The
    Board and the American Legion recently signed a Memorandum of
    Understanding creating a framework for ACTL to prepare Informal Hearing
    Presentations (IHP or briefs) on behalf of the American Legion, in
    order to move Veteran's appeals more quickly to the Board for appellate
    review. The Board looks forward to receiving briefs in the near future
    from the attorneys of the ACTL.

        Question 22.  Over the past year, the Inspector General has issued
    at least 15 reports finding that the Veterans Benefits Administration
    has not been taking timely action to reduce or discontinue benefits
    when required by the law and evidence and as a result may disperse
    millions of dollars in overpayments. Please describe what steps VA is
    taking--or plans to take--to ensure that the Veterans Benefits
    Administration is being a good steward of taxpayer dollars.
        Response. As VBA continues to receive and complete record numbers
    of disability compensation rating claims, the result is a corresponding
    increase in the volumes of non-rating claims (to include benefit
    reduction cases). VBA completed 3.1 million non-rating actions in FY
    2015, the highest production of non-rating work in 20 years and 72
    percent more than in FY 2011. Benefit reviews and award adjustments
    involving reductions in benefits are often complex, multi-step
    processes that include due-process notifications prior to making the
    reductions. These cases frequently involve hearing requests and
    submission of additional evidence, which extends the processing
    timeframe. Overpayments can result from processing actions to remove a
    spouse or child; award adjustments required as a result of a Veteran's
    receipt of Reserve/National Guard drill pay, changes in income, and
    numerous other statutory requirements. VBA continues to work to
    automate and streamline its claims processes including those that
    relate to benefit reductions highlighted below.

         Removal of a dependent
            - Dependency Rapid Response Pilot--All VBA call centers now
            have the capability to handle dependency adjustments at the
            point of call, such as removing a spouse due to death or
            divorce.
            - Online Dependency Claims--VBA developed the Rules-Based
            Processing System (RBPS) to automate adjustments for adding or
            removing dependents. Over 60 percent of the dependency claims
            filed through RBPS are now automatically processed.

         Drill Pay Adjustments
            - By law, Veterans cannot receive VA benefits and drill pay
            concurrently. VBA is working with DOD to streamline and
            automate the drill pay offset process through an upfront
            agreement from National Guard and Reserve members. This will
            help reduce the impact of drill reductions and improper
            payments per OMB Circular A-123 on improper payments.
            - VBA hired employees specifically to assist with non-rating
            work, initially focusing on drill pay offsets.

         Adjustments to temporary 100 percent disability
    evaluations
            - VBA is developing a report that will enable ROs to more
            easily identify and take timely action on cases with temporary
            evaluations that require review to determine current level of
            disability. Beginning in April 2016, this report will be
            distributed to ROs on a weekly basis.

         Pension Income Adjustments
            - VA now has access to a claimant's SSA benefit information and
            reviews the information when processing an original or
            supplemental claim. VA also conducts annual computer matches
            with SSA for the purpose of verifying claimants' social
            security benefit rates to ensure that VA is counting the
            correct rates.

        Question 23.  The FY 2017 budget request includes this information
    regarding disability claims processing: ``Increased automation now
    enables Veterans to file claims, upload evidence, and check the status
    of their claims on-line through eBenefits, helping to improve accuracy
    and productivity.'' (Page VBA-158)
        A. Please quantify the impact automation has had on accuracy and
    productivity to date.
        Response. please refer to response to Question 23B.

        B. Please quantify what impact improvements in automation funded by
    the FY 2017 budget request are expected to have on accuracy and
    productivity.
        Response. VBA has reduced the number of claims pending more than
    125 days by 86 percent, from a peak of 611,000 in March 2013 to
    historic lows--79,004 claims as of March 31, 2016. VBA's process
    improvements, such as VBMS and the National Work Queue (NWQ), continue
    to provide increased efficiencies in the claims process. By modernizing
    from a paper based system to an electronic claims processing system,
    VBA has increased its claim productivity per claims processor by 25
    percent since 2011 and medical issue productivity by 82 percent per
    claims processor since 2009. In 2017, VBA will build on the success of
    the transformation initiatives described below to continue this
    progress.
        Veterans Benefits Management System--VBMS, as VBA's key business
    transformation initiative, provides a paperless claims-processing
    environment and improved business processes to support timely, high-
    quality decisions for Veterans and their dependents. VBA's shift to
    electronic folders in VBMS addressed the inefficiencies of the paper
    folders and the problems of misplaced files and records. Through a web-
    based application, multiple, geographically separated users can view
    the electronic folders simultaneously, thereby minimizing the need for
    sequential processing and eliminating the delays of receipt of paper
    folders at ROs. VBMS also provides automation of processes such as the
    receipt of evidence, movement of claims to the next stage, and updates
    to the claims status, which means more Veterans are receiving faster
    decisions. As of March 7, 2016, VBA completed over 4.4 million rating
    decisions and processed over 2.5 million claims end-to-end in VBMS. In
    FY 2017, VBMS will focus on the delivery of electronic service
    treatment records, establishing one authoritative source for Veteran
    contact information, and collaborating with the Board of Veterans'
    Appeals to define the appeals functionality needed both at the regional
    offices and as part of the broader appeals modernization efforts.
        During FY 2017, VBA will continue expanding the delivery of the
    electronic service treatment records (STRs). In FY 2017, VBMS will be
    incorporating the Records Management Center (RMC) into VBMS in order to
    exchange electronic records. Benefits of this implementation include
    the ability to process requests from field end-users without using
    legacy systems. Additionally, field end-users will be able to view
    status requests, eliminating significant burden on the RMC to respond
    to inquiries and the cumbersome manual work needed in order to process
    an RMC records request using legacy systems.
        VBMS continues to enhance STRs requests from the Department of
    Defense (DOD). In FY 2017, this will include functionality previously
    received from legacy systems that would allow VBMS to obtain military
    service information and treatment records from the Health Artifact and
    Image Solution (HAIMS). Additional enhancements with the DOD includes
    receiving electronic STRs prior to discharge for Integrated Disability
    Evaluation Systems (IDES) claims as well as reporting functionality for
    subscriptions from VBMS to Data Access Service (DAS).
        On FY 2016, VBMS coordinated with US Digital Services to secure a
    five-percent level of effort in each VBMS release in support of the
    appeals modernization efforts. At this time, that five-percent level of
    effort will continue in FY 2017 to support the appeals modernization
    integration efforts in VBMS.

        Question 24.  The FY 2017 budget request (page VBA-162) includes
    this information regarding the Veterans Benefits Management System:

            [The Veterans Benefits Management System] has supported quicker
            and more accurate delivery of benefits to millions of Veterans
            and beneficiaries. In addition, the system has improved the
            overall speed, accuracy, and consistency of decisions for
            Veterans by providing the tools the workforce needs to meet
            growing demand and claim complexity.

        A. Please quantify the impact the Veterans Benefits Management
    System has had on the speed, accuracy, or consistency of decisions to
    date.
        Response. Please refer to response to Question 23 under the
    paragraph ``Veterans Benefits Management System.''

        B. Please quantify what impact future improvements to the Veterans
    Benefits Management System are expected to have on the speed, accuracy,
    or consistency of decisions.
        Response. Ongoing positive impact to speed, accuracy, and
    consistency is expected with VBMS functionality planned for FY 2016 and
    FY 2017. One of VBA's priorities remains the reduction of reliance on
    legacy systems with a specific focus on decreasing the number of times
    a user would need to exit VBMS to perform claims processing tasks,
    allowing for greater consolidated processing.
        VA will retire legacy systems when mission needs change, when a new
    system (e.g. VBMS) has taken on the capabilities of an old system, when
    system consolidation will improve Veteran service delivery, or when the
    system is no longer supported by a vendor. As VBMS continues to
    progress and evolve, development of functionality to encompass other
    areas of work may provide the opportunity to decommission legacy
    systems.
        Rating Board Automation (RBA) 2000 is one of 11 applications
    included in the Veterans Service Network (VETSNET) suite. It was
    previously used to complete disability rating decisions, but these
    capabilities are now provided by VBMS. There are currently no active
    RBA 2000 users as this application was retired on January 21, 2016.
        While we are unable to provide a timeframe for retirement of other
    legacy systems, VBA expects to have identified the functionality needed
    to fully transition from the Modern Award Processing Development (MAP-
    D) and VETSNET awards applications to VBMS by December 31, 2016.
    Efforts are also underway toward retirement of Virtual VA and future
    functionality in VBMS will support those efforts as well.
        VBA will collaborate with the VA Office of Information and
    Technology to accurately address cost and savings projections for IT
    Appropriations and provide a response by September 30, 2016.

        Question 25.  According to the FY 2017 budget request, VA is
    requesting $1.1 billion for ``Other Services'' for the Veterans
    Benefits Administration, a $219 million increase over the current
    estimate for FY 2016. (Page VBA-173) Please provide an itemized
    breakout of how those funds would be expended in FY 2017.
        Response. The discretionary request for $1.1 billion contains
    contract funding of $732.8 million that directly impacts or supports
    the delivery of disability compensation claims; $171.6 million to
    support the delivery of education, vocational rehabilitation and
    employment, and home loan benefits; and $178.0 million to support
    mission requirements:

         Contract Medical Examinations ($530.0 million)
         Veterans Claims Intake Program (scanning) ($138.7 million)
         Costs associated with centrally managed services to
    include Financial Service Center, Debt Management Center, National
    Archives and Records Administration, Homeland Security, and Human
    Capital Improvement Program ($110.1 million)
         Transition Assistance Program ($106.9 million)
         Support contracts to provide analytics and innovative
    Programmatic tools (VA Loan Electronic Reporting Interface, Real Estate
    Owned and Portfolio Servicing Contract (RPSC), and Appraisal Management
    Service (AMS)) for VA's Home Loan Program to service and protect loans
    for Veterans ($57.0 million)
         Program management and systems engineering support
    services for VBMS ($28.8 million)
         Centralized Mail Processing System ($26.7 million)
         Support contracts for strategic initiatives and solutions
    enabling an efficient operating environment ($21.9 million)
         Mission support contracts for VBA's 56 regional offices to
    include VR&E contract counseling, security, maintenance and repairs,
    GSA overtime utilities, and PCS related expenses ($29.3 million)
         Mission support contracts for VBA central office to
    include studies and analyses to improve delivery of benefits, technical
    expertise for key initiatives, and maintenance and repairs ($21.4
    million)
         Instructional methodologies and systems that support the
    training and skills development of the disability compensation
    workforce ($8.6 million)
         Coordination of business requirements to provide continued
    execution of VR&E programs and a longitudinal study and field staffing
    model to improve and enhance Veterans' programs and benefits ($3.0
    million)

        Question 26.  According to the FY 2017 budget request (page VBA-
    192), Quality Review Teams completed 178,506 in-process reviews during
    FY 2015 and VA expects those teams to complete 240,000 in-process
    reviews each year during FY 2016 and FY 2017.
        A. How many employees were dedicated to Quality Review Teams during
    FY 2015 and how much in total was expended for that purpose?
        Response. In FY 2015, VBA obligated $71.3 million to support 771
    Quality Review Specialists (QRSs) assigned to the Quality Review Teams
    (QRTs).

        B. How many employees are expected to be dedicated to Quality
    Review Teams during FY 2016 and FY 2017 and how much in total would VA
    expect to expend for that purpose during those years?
        Response. As of March 2016, VBA has 784 QRT members. The ratio of
    QRSs to claims processors will remain unchanged, resulting in
    consistent staffing levels for FY 2016 and FY 2017. VBA estimates it
    will obligate approximately $73.9 million and $76.4 million,
    respectively.

        C. What factors account for the expected increase in the number of
    in-process reviews completed during FY 2016 and FY 2017?
        Response. In 2015, the QRTs were able to complete 178,506 in-
    process reviews (IPRs) as a result of performing this task on overtime.
    In 2016, the QRTs will not be performing this task on overtime. The
    standard goal of required IPRs for each station is 10 percent of its
    monthly production; therefore, the anticipated number of IPRs for FY
    2016 is 120,000. The goal for completed IPR reviews nationwide for FY
    2016 and FY 2017 remains at 120,000 IPR reviews for each fiscal year,
    for a combined total of 240,000 IPR reviews.

        Question 27.  According to the FY 2017 budget request (page VBA-
    203), more than 70,000 non-rating actions were completed by the
    Dependency Claims contractor during FY 2015.
        A. In total, how much has VA expended on the Dependency Claims
    contractor and how much, if any, does VA plan to expend during FY 2016
    and FY 2017?
        Response. VA spent approximately $4.8 million on the Dependency
    Claims contract from April 21, 2014, to January 20, 2016. VA
    anticipates spending approximately $2.4 million per year for FY 2016
    and FY 2017.
        B. How many non-rating actions does VA expect the Dependency Claims
    contractor to complete during FY 2016 and during FY 2017
        Response. In FYs 2016 and 2017, VA anticipates completion of
    approximately 30,000 non-rating actions per year.

        Question 28.  According to the FY 2017 budget request (page VBA-
    54), VA uses Internal Revenue Service and Social Security
    Administration records to verify income levels of certain beneficiaries
    and that process ``is the most efficient and effective means VA has of
    verifying certain types of income, wages, interest, dividends,
    annuities, etc.'' On the other hand, the Government Accountability
    Office made this finding in a report last year:

            VA does not use available third-party earning data to verify
            veterans' self-attested employment history and income
            information. Without such verification, VA cannot adequately
            ensure that the eligibility standards are being met, which
            places these benefits at risk of being awarded to ineligible
            veterans.

        A. Please provide the Committee with additional information about
    the process currently used to verify beneficiary incomes and any
    additional options VA plans to explore if this budget is adopted.
        Response. Under current data sharing agreements with the Internal
    Revenue Service (IRS) and the Social Security Administration (SSA), VA
    utilizes an upfront income verification process, which allows pension
    management centers to verify a beneficiary's reported income. This
    approach allows VA to maintain the integrity of its program, while also
    reducing improper payments. VA is continuing to work with IRS and SSA
    to expand this process to all pension-related benefit claims,
    regardless of the issue, and disability compensation claims based on
    individual unemployability. VA anticipates expansion of this process by
    June 2016.
        In addition, VBA is transitioning from the paper-based Income
    Verification Match (IVM) process to a semi-automated, electronic post
    award audit (PAA) process. In FY 2012, VBA temporarily suspended the
    release of all paper IVM worksheets to allow for the development and
    implementation of the PAA process. The PAA process will provide more
    focused reviews of VA beneficiaries receiving benefits based on self-
    reported income information to ensure continued program entitlement.
    VBA is working with VA's Office of Information and Technology to
    finalize the necessary system requirements and anticipates implementing
    the PAA process by September 2016.

        Question 29.  During FY 2015, how much in total did VA expend with
    respect to the Integrated Disability Evaluation System (IDES) and how
    many VA employees were dedicated to the IDES process? During FY 2016,
    how much in total does VA expect to expend with respect to IDES and how
    many VA employees will be dedicated to the IDES process? During FY
    2017, how much in total is VA requesting with respect to IDES and how
    many VA employees would that level of funding support?
        Response. VA's total for FY 2015 was approximately $75,777,099,
    which excludes VHA for the reasons listed below:

        Office of Policy and Planning (OPP)--During FY 2015, OPP spent
    approximately $1,177,099 which is comprised of $583,692 for a program
    management support contract, $573,407 in salary for 5 FTE, and $20,000
    in travel costs.
        Veterans Health Administration (VHA)--VHA does not provide separate
    funding for the IDES Program. Commencing in FY 2014, funding for this
    program has been included in VHA's Veterans Equitable Resource
    Allocation (VERA) model. Staffs located at the VA medical centers
    (VAMCs) are not solely dedicated to supporting the IDES process.
        Veterans Benefits Administration (VBA)--In FY 2015, VBA spent
    approximately $74.6 million for salaries and other GOE for 638 FTE
    dedicated to disability claims processing in the Integrated Disability
    Evaluation System (IDES). Compensation staff and Vocational
    Rehabilitation and Employment (VR&E) counselors are included in this
    count. Veterans filing claims through the IDES sites are captured in
    the nationwide Veteran caseload count and total compensation benefit
    obligations; therefore, mandatory funding cannot be separated for this
    program.

        Response. VA's estimated total for FY 2016 is $77,387,332 which
    excludes VHA for the reason listed below:

        OPP--During FY 2016, OPP should spend approximately $1,187,332,
    which is comprised of $586,242 for a program management support
    contract (Final Option Year), $581,090 in salary for 5 FTE, and $20,000
    in travel costs.
        VHA--VHA does not provide separate funding for the IDES Program.
    Commencing in FY 2014, funding for this program has been included in
    VHA's Veterans Equitable Resource Allocation (VERA) model. Staffs
    located at the VAMCs are not solely dedicated to supporting the IDES
    process.
        VBA--During FY 2016, VBA estimates it will spend approximately
    $76.2 million to support 638 FTE dedicated to disability claims
    processing in IDES.

        Response. VA's estimated total for FY 2017 is $79,030,375, which
    excludes VHA for the reason listed below:

        OPP--During FY 2017, OPP should spend approximately $1,230,374,
    which is comprised of $600,000 for a new program management support
    contract if needed, $590,374 in salary for 5 FTE, and $40,000 in travel
    costs. The increase in travel is to fund increased site visits to the
    field.
        VHA--VHA does not provide separate funding for the IDES Program.
    Commencing in FY 2014, funding for this program has been included in
    VHA's VERA model. Staffs located at the VAMCs are not solely dedicated
    to supporting the IDES process.
        VBA--It is expected that in FY 2017, VBA will maintain staffing at
    the Providence and Seattle Disability Rating Activity Sites (DRAS) at
    the same FY 2015/FY 2016 levels and $77.8 million will support 638 FTE.

        Question 30.  The budget notes that, in 2015, the Insurance Program
    contacted 1,900 veterans per month as part of a special outreach
    program. Among the veterans contacted in 2015, how many obtained
    insurance coverage?
        Response. In FY 2015, the special outreach program contacted a
    total of 23,033 Veterans (for an average of 1,919 per month). A total
    of 8,235 Veterans' Group Life Insurance policies were issued to those
    Veterans contacted, i.e., 35.8 percent were granted insurance coverage.

        Question 31.  To date, how many unique awards have been provided to
    an estate of a deceased Nehmer class member and what is the total award
    amount?
        Response. As of March 2016, VA has awarded $440,435,895 in monetary
    benefits to individuals or estates as survivors of deceased Nehmer
    beneficiaries as required under 38 CFR 3.816(f) to 11,991 individuals.
    This amount includes persons who paid funeral or last medical expenses
    on behalf of the Veteran's estate.
                           board of veterans' appeals
        Question 32.  According to the FY 2017 budget request (page BVA-
    280), the Board of Veterans' Appeals is undertaking a number of
    initiatives other than legislative reforms to attempt to improve
    productivity. Please quantify what level of productivity improvements
    those efforts are expected to produce.
        Response.
                        transforming the appeal process
        VA has made significant progress on its goal to eliminate its
    disability claims backlog and improve the quality of its initial
    decisions on claims without seeking significant statutory changes. VBA
    Transformation Plan focuses on improving personnel performance,
    redesigning business processes, and replacing paperbound and manual
    systems with those that are digital and automated. As outlined in VA's
    appeals plan, VBA and the Board of Veterans' Appeals (Board) can deploy
    similar people, process, and technology innovations in the appeal
    process, but those innovations will not provide a real solution without
    stakeholder support. In this regard, the appeals problem is unique, and
    one should not view this preliminary plan as providing a comprehensive
    solution. Absent a comprehensive solution that considers the unique
    statutory procedures that govern VA's appellate system, VA will use its
    limited resources as efficiently as possible to decide appeals under
    the inefficient process required under existing law.
        Current law requires that VA maintain a non-linear, multi-step,
    open-record, administrative appeal process, with jurisdiction over
    various steps in the process split between VBA and the Board. There is
    no bright line distinguishing the end of VBA's claim adjudication
    process from the beginning of the appeal process. Unlike a typical
    appeal process in which the appellate body reviews the same record as
    the initial decisionmaker, VA's administrative appeal process has an
    open record. Under the current framework, appellants, at no cost and
    without limitation, may submit additional evidence at virtually any
    time during the pending appeal, regardless of whether the appeal is at
    VBA or the Board, and VBA must generally reevaluate the claim based
    upon the new evidence. This feature prolongs the amount of time that
    Veterans must wait for their appeal to be decided and commits extensive
    resources to each appeal. As a result, Veterans who receive their
    initial decisions from VBA in 125 days under the Transformation Plan
    will nonetheless endure an inefficient VA appeal process. The delays in
    a benefits system that delivers an initial decision within 125 days and
    an appellate decision on average in more than 1,000 days may outweigh
    any benefit to a multi-step, open-record system. Although some
    individual claimants may be able to take advantage of the current legal
    framework, it comes at the cost of failing to provide Veterans as a
    whole a timely resolution on their appeals.
        VBA's Transformation Plan for the initial claim process is
    structured for the future (more than one million claims annually,
    multiple complex medical issues in each claim, and electronic
    submission and processing), while the appeal process set out in current
    law is an accumulation of processes and procedures that have built up
    in stages since WWI. The legal framework of the appeal process precedes
    the all-volunteer military force, the computer revolution, and judicial
    review of VA's decisions on claims. For example, the Fully Developed
    Claims program encourages claimants and representatives to build and
    submit claims before VA renders a decision, while the appeal process
    encourages them to build their claims after a decision by allowing
    subsequent submission of evidence in a piecemeal fashion.
        VA's Appeals Transformation Plan requires integrated legislative,
    people, process, and technology initiatives designed to deliver a final
    agency decision for most Veterans within a year of filing by 2021. As
    noted above, the current VA appeals process which is set in law, is
    broken, and is providing Veterans a frustrating experience. It has no
    defined endpoint and requires continuous evidence gathering and re-
    adjudication of the same or similar matter. The present legal framework
    is complex, inefficient, ineffective, and confusing, and Veterans wait
    much too long for final resolution of an appeal. Currently, we face an
    important decision about the future of appeals for Veterans, taxpayers
    and other stakeholders.
        If Congress accepts that the current VA appeals process is broken
    and that the status quo is unacceptable for Veterans, then there is a
    choice to be made regarding how to provide Veterans with a timely
    appeals decision. The 2017 Budget Request outlined that there are
    essentially two options for ensuring that Veterans receive timely
    appeals decisions: (1) implement legislative change to streamline the
    process for new appeals and provide a short-term increase in funding
    from 2017 to 2021 to address the currently pending 458,000 appeals, or
    (2) provide significant sustained funding (approximately $1B per year
    from 2017 on) to continue applying the current inefficient, complex,
    and confusing VA appeals process. Since submission of the 2017 Budget
    Request, VA participated in an appeals summit, during which
    representatives from a wide spectrum of stakeholder groups met with key
    officials from VBA and the Board to determine how to best reconfigure
    the current VA appeals process. The result of that summit was a new
    appeals framework, as encompassed in Senator Blumenthal's draft bill
    examined in the Committee's May 24 legislative hearing, which if
    enacted will provide Veterans with timely, fair, quality decisions. If
    we fail to act now, the magnitude of the problem will continue to
    compound, such that by the end of 2027, Veterans will be waiting on
    average 10 years for a decision on their appeal. However, VA cannot
    fully transform its appeal process without stakeholder support. VA
    intends to work with Congress and other stakeholders to pursue the
    comprehensive legislative change required to provide Veterans the
    timely appeals process that they deserve.
                               people initiatives
        VBA is grateful for funding to hire 100 appeals FTE in FY 2015 and
    200 appeals FTE in FY 2016. In FY 2016, VBA has increased its appeals
    workforce to 1,495 employees as of January 2016. To maximize
    productivity and accuracy of appeals decisions while at the same time
    minimize training on VA's complex appeals process, VBA hired new
    employees into the disability claim processing teams and moved seasoned
    claims processors into the appeals teams.
        In FY 2015, the Board was able to hire staff to continue supporting
    its mission to serve more Veterans and their families. Specifically, in
    order to both maintain staffing levels and increase capacity where
    possible, the Board hired 82 staff (including new hires and backfills
    for attrition), the majority of which were attorneys (68).
        If allocated by Congress, the Board will begin the recruitment
    process for the 242 additional employees immediately upon enactment of
    the FY 2017 budget in order to support execution of the funding by the
    end of the fiscal year. In advance of the actual job announcement, the
    Board is working with the Office of Personnel Management on an
    aggressive strategic recruitment plan, to ensure successful execution.
    The 242 additional employees will primarily consist of staff attorneys
    to draft appeals decisions, with an appropriate complement of
    administrative support staff and some additional judges. For new
    attorney staff, the Board has a 6-month training curriculum to ensure
    thorough training on Veterans benefits law. New judges will undergo
    rigorous initial training with follow-up mentoring and continuing
    education for both legal training and leadership training.
    Administrative staff will also undergo new employee training specific
    to their business line. Most of the 242 employees would be staff
    attorneys. Specifically, the goal is for 145 attorneys, 24 judges, and
    73 support staff.
        Taking lessons learned from the 2013 hiring surge of 100 attorneys
    in a 4-month timeframe, the challenges faced would include human
    resources support, information technology (IT) support, training
    support, and office space. These challenges would be handled by having
    a strong recruitment plan in place this year, in advance of the budget
    enactment, with a tiger team of dedicated personnel to handle the
    recruitment and on-boarding. The IT needs would also be identified in
    advance, with a streamlined plan to have the necessary equipment in
    place in a timely fashion as new hires were on-boarded. The training
    needs would be handled by having a strong training plan in place, using
    lessons learned from the large training in 2013, and subsequent
    trainings. Finally, the office space requirements would be handled by a
    combination of repurposing existing space for storing paper claims
    files, and increasing telework for eligible employees.
                              process initiatives
    (a) Standard Notice of Disagreement Form
        On March 24, 2015, VA's final rulemaking, RIN: 2900-AO81, Standard
    Claims and Appeals Forms, became effective. This rulemaking requires
    claimants to initiate an appeal using a standard notice of disagreement
    (NOD) form in cases where such a form is provided by VA. The purpose of
    this standardization is to improve communications with appellants at
    the beginning of the appeal process and allow VBA personnel to easily
    identify and initiate the processing of an appeal. By using the
    standard form for initiating an appeal, VA need not undergo an
    inefficient interpretive exercise as to whether a given document is a
    NOD and can process appeals more expeditiously. By requiring the use of
    a standard NOD form, all appellants in the appeal process will benefit
    from shortened processing time and from increased accuracy in
    identifying contentions claimed.
        VA has also recently amended the NOD form to allow claimants to
    elect either de novo review or the traditional appeal process at the
    time the appeal is initiated. Appeals processing times will be reduced
    for those claimants who make the election on the form as VA will not
    have to wait an additional 60 days for the claimant to make the
    election to begin processing the appeal.
    (b) Centralized Mail
        In May 2014, VBA and the Board initiated a plan to integrate the
    Board with VBA's Centralized Mail process. In June 2014, the Board
    formally partnered with VBA's Office of Business Process Integration
    (OBPI) to begin implementation of Centralized Mail at the Board. The
    Board has worked very closely with OBPI, leveraging best practices from
    VBA to implement similar change management strategies by having the
    Board's mailroom team jointly evaluate the current, As-Is state and
    develop the future, To-Be state to optimize efficiencies in mail
    processing. The Board is now currently piloting centralized mail with
    VBA, and is executing the first phase of this initiative. During this
    first phase, the Board is shipping appeals-related mail to the scanning
    vendor. Once scanned, the scanning vendor seamlessly uploads the mail
    to the Board's Centralized Mail portal, from which the mail can be
    electronically processed by Board staff.
        In the second phase of the Board's centralized mail initiative,
    Veterans will be able to send their appeals-related mail directly to a
    new mailing address established for the Board, which will be a P.O. Box
    affiliated with the scanning vendor. Once successful testing of use of
    the Board's new P.O. Box has been completed and verified, a regulatory
    change to the Code of Federal Regulations will be published to update
    the Board's mailing address.
    (c) Board Hearings
        Current law entitles an appellant to an in-person hearing before
    the Board at its principal location in Washington, DC, or, more
    frequently, at the appellant's local VBA RO. 38 U.S.C. Sec. 7107(d)
    (1). The Board is also authorized to offer an appellant a
    videoconference hearing in cases where the appellant is at the RO and
    the Veterans Law Judge (VLJ) is in Washington, DC; however, an
    appellant must affirmatively choose this type of hearing.
    Statistically, videoconference hearings have been shown to have the
    same grant rate as in-person hearings. However, the wait times for in-
    person hearings at ROs (also known as Travel Board hearings) are much
    greater than for videoconference hearings because VLJs must travel to
    conduct hearings.
        Beginning in June 2015, the Board hosted productive meetings with
    members of Veterans Service Organization (VSO) leadership to discuss
    general items of interest, including case inventory, the hearing
    workload, and hearing wait times. As a result of these meetings, VSO
    leadership agreed to take the lead on clarifying the validity of
    pending hearing requests with their clients. To facilitate the VSO
    initiative to clarify the validity of pending hearing requests with
    their clients, the Board provided the VSO workgroup members with
    hearing data, including a list of each VSO's clients with a pending
    hearing request, average hearing wait time data by RO, and hearing show
    rate data for each RO.
        VBA's Office of Field Operations is continuing to employ best
    practices for scheduling hearings. Additionally, to better align
    Veteran expectations with the current process, the workgroup has
    discussed implementation of moving hearing election from the VA Form 9
    to the arrival of case at the Board and discussed discipline in
    rescheduling hearings following a no show, or repeated requests for
    postponement.
        Despite these efforts to increase efficiency in scheduling and
    conducting Board hearings, significant legislative reform related to
    Board hearings is required. Senator Blumenthal's draft bill examined in
    the Committee's May 24 legislative hearing provides such reform. That
    legislation provides that the Board will determine whether a Board
    hearing will be held either (1) at the Board's principal location or
    (2) by picture and voice transmission at a VA facility with suitable
    facilities and equipment. Providing for these two types of Board
    hearings, the draft bill retains a Veteran's ability to present
    testimony before a Veterans Law Judge, but improves the appeals process
    by providing for two types of Board hearings which may be scheduled and
    conducted much more efficiently, and at decreased cost to the taxpayer,
    than in-person hearings at VA facilities other than the Board's
    principal location. If, after being notified of the type of hearing
    selected by the Board, a Veteran would prefer the other type of
    hearing; he or she may make such request, which will be granted by the
    Board. Veterans retain the ability to present testimony during a Board
    hearing, either in-person before a Veterans Law Judge in Washington,
    DC, or via videoconference, but the costly and inefficient in-person
    hearing at the RO (Travel Board hearing) is eliminated.
        The draft bill also improves the appeals process for Veterans who
    do not want a Board hearing. The cases of all Veterans, regardless of
    whether or not they have requested a Board hearing, must be decided in
    docket order, with an exception for cases that have been advanced on
    the docket. The draft bill, however, establishes two separate dockets;
    a hearing-option docket and a non-hearing option docket, and allows
    cases before the Board to be decided in regular order according to
    their respective place on either docket; retaining an exception for
    cases advanced on the docket. The creation of two separate dockets
    allows these two different types of appeals to be better managed, and
    will result in increased efficiency, particularly for those Veterans
    with cases on the non-hearing option docket.
    (d) Allocation of Hearing Resources
        To ensure that available hearing resources are being maximized for
    Veterans and other appellants across the 56 ROs, the Board thoroughly
    re-evaluated hearing data regarding utilization rates, oldest docket
    date cases at each RO, and individual hearing demand by hearing type at
    each RO when creating the 2016 hearing schedule. With regard to Travel
    Board (TB) hearings (face-to-face hearings conducted at the RO), the
    approach was to ensure that available resources were maximized for
    Veterans by assigning hearing dockets based on each RO's historical
    hearing utilization rate and its pending TB hearing request volume.
    With regard to video teleconference hearings (conducted between the
    Board and the RO), the approach was to target ROs with the oldest
    pending hearing requests by focusing on those requests with a docket
    date that is within the Board's docket date range at the time of
    scheduling formulation. This data-driven model will ensure that limited
    hearing resources (i.e., approximately 16,000 available hearing
    opportunities per year with 65,000 Veterans currently awaiting a
    hearing) are being most efficiently allocated to address the growing
    volume of pending hearing requests.
    (e) Customer Service Improvements
        Consistent with the MyVA initiative of improving the Veteran
    experience, in 2015, the Board initiated a ``Veteran Experience
    Workgroup'' to leverage Veteran feedback from the Board's ``Voice of
    the Veteran'' survey, and to make meaningful improvements for veterans
    as they navigate the appeals process. This group of employees from
    across the Board, including Judges, attorneys, administrative staff,
    and managers, is focused on identifying areas prime for improved
    customer service, including Contacts Experience, Hearing Experience,
    Decision Experience, and Appeals Process Experience. Through continued
    dialog on these critical areas, the group anticipates generating
    results-oriented solutions to improving the Veterans' experience with
    the VA appeals process.
                             technology initiatives
    Appeals Modernization
        The Department is leading an Appeals Modernization initiative to
    better serve Veterans and their families and provide timely and quality
    appeals decisions. As a part of this broad initiative, information
    technology funds have been requested to develop robust paperless
    functionality in the VA appeals process. This effort is part of the
    Board's multi-pronged approach to leverage technology, people, process
    improvements, and long-needed sweeping legislative reform to most
    effectively serve Veterans and their families in the efficient
    processing of appeals.
        Appeals across the Department are currently processed in a hybrid
    environment--with continued reliance on paper, and multiple
    unsynchronized, outdated legacy systems. Manual data entry and lack of
    appeals-specific paperless functionality creates risk for the
    Department in workload management, as well as processing delays.
    Currently, there is minimal appeals-specific paperless functionality in
    the technology systems, which creates inefficiencies in end-to-end
    appeals processing.
        VA has seen the benefits of people, process and technology
    transformation at the claims level with increased claims decisions
    being issued and more Veterans being served--almost 1.4 million in
    2015; the same rigorous, multi-pronged efforts to modernize must be
    applied to the appeals process. The Board is leading this Appeals
    Modernization initiative, which includes robust IT and FTE components,
    in order to mitigate risks and to provide timely service to Veterans
    and their families. Notably, with appeals-specific technology
    functionality enhancements, Veterans and their families will directly
    benefit through issuance of more appeals decisions more efficiently. In
    addition, the Department anticipates gaining future cost savings by
    being able to retire or ``sunset'' outdated and unsynchronized legacy
    systems exclusively used for appeals processing, such as the Veterans
    Appeals Control and Locator System (VACOLS), which was created in the
    1980s.
        With FY 2016 IT funding enacted, the Department will be able to
    begin a multi-phase process of enhancing appeals functionality in the
    paperless environment. These enhancements are necessary to keep pace
    with the transformation of benefits processing that has occurred on the
    front end (i.e., claims) of the VA benefits system. Initial key
    appeals-specific functionalities in the paperless environment will
    focus on seamless integration of systems, and key accountability and
    workability features.
        The Department and Board are appreciative of the attention and
    funding that has been provided to directly address the technology voids
    that will become increasingly problematic without implementation of the
    proper solutions. In preparation for execution of FY 2016 funds, in FY
    2015, the Board performed the necessary due diligence and analysis of
    relevant business requirements to understand the current state of
    appeals processing and create the structure to enable delivery of
    technology capabilities in FY 2016 and beyond. In FY 2016, the United
    States Digital Service at VA (DSVA), using the approach described in
    detail below, will undertake the replacement of VACOLS system, created
    in the 1980s, and provide the Department with more secure and efficient
    processing capabilities. The new tool, called Caseflow, will consist of
    both commercial off the shelf (COTS) and custom-developed software, as
    dictated by the needs of the Department. The majority of funds in FY
    2016 are to be allocated to contractor support that will be working
    with the Digital Service Team to design and develop required technology
    components. These components will build on the first deliverable of FY
    2016, Caseflow Certification, which introduces automation and
    consistency to the process of transferring appeals from local field
    offices to the Board. The second most significant use of FY 2016 funds
    supports the planned acquisition of an eReader COTS product, a tool
    that will enable attorneys and Judges at the Board to efficiently and
    effectively review electronic appeals documents in a best-practice
    manner.
                     updates to vbms for appeals processing
    Automation
        VBA's VBMS office is working on leveraging existing VBMS
    infrastructure to gain efficiencies in processing appeals using
    calculator tools and rules-based automation.
    eFolder Infrastructure
        The VBMS eFolder is the electronic replacement for the legacy paper
    claims folder. The eFolder serves as the primary repository for all
    electronic documentation related to a particular Veteran. Users would
    access the eFolder to review all documentation relevant to a Veteran's
    claim. This would include internal and external stakeholders such as
    VHA practitioners and VSO representatives. Unlike the paper claims
    folder, the VBMS eFolder supports simultaneous access of multiple users
    to a single Veteran's eFolder.
    Correspondence Component
        A key component of the new appeals system would be to leverage the
    new enterprise correspondence component, which is a highly customizable
    correspondence assembly engine that provides document design
    functionality and a business-rules engine that enables full automation
    of letter assembly.
      sweeping legislative reform needed to modernize the appeals process
        While VA is applying lessons learned from the transformative
    changes that allowed it to reduce the disability claims backlog, and
    applying people, process, and technology initiatives to the appeals
    process to gain efficiency in the way appeals are managed and
    processed, these measures will not be enough. Fundamental legislative
    reform is essential to ensure Veterans have a timely, fair, and quality
    appeals process. To this end, the President's 2017 Budget proposed a
    simplified appeals initiative--legislation and resources--to provide
    most Veterans a final decision on their appeal within one year of
    filing by FY 2021. VA intended that the legislative proposals in the
    2017 Budget would be the starting point for the broader conversation
    about how the Department, Congress, VSO, and other stakeholders can
    work together to provide Veterans with a simple, timely, transparent,
    and fair appeals process.
        VA has brought together the Nation's leading veteran advocacy
    groups for their input. They are our steadfast partners in improving
    the way we deliver services to veterans.
        As a result of weeks of listening as a result of that
    collaboration, VA has put forward a new proposal that would provide
    veterans with a simple, fair, and transparent appeals process in which,
    with the appropriate resources provided by Congress in future
    appropriations, the vast majority would receive a final appeals
    decision within one year of filing an appeal by 2021. This
    disentanglement of process is enabled by one crucial innovation--giving
    veterans multiple paths to adjudicate disputes on a claim, while
    preserving the effective date that the initial claim was filed. VA's
    consensus proposal was put forward as a discussion draft by Ranking
    Member Blumenthal and was the subject of the Committee's May 24, 2016,
    legislative hearing.
        This simple change, along with a few others, will modernize the
    Veteran appeals process, better serving Veterans, taxpayers, and the
    Nation for years to come. However, since it was layer upon layer of law
    that got us tangled, VA will need Congress' help to untangle it, and
    has been working to make this legislative change a reality, and soon.
                             information technology
        Question 33.  The Secretary's testimony at the budget hearing notes
    significant investment in improving and automating processes related to
    claims for various benefits, including compensation, pension, and
    education benefits. The Committee has heard in previous testimony about
    how certain changes to benefits eligibility often incur relatively high
    costs just to modify processing systems to accommodate the new rules.
    Please explain where these various benefits claims systems are in their
    overall development timeline and what future changes to eligibility
    will look like in terms of time and cost once development is complete.
        Response. The Office of Information & Technology (OI&T) has
    utilized the Project Management Accountability System (PMAS) to ensure
    that VA is developing quality products and overseeing investments
    responsibly. However, the process has been found to be overly
    burdensome, administratively heavy, and has inadvertently contributed
    to increases in project length and overall cost.
        To decrease the time to market and lower the overall cost of
    development, OI&T is pursuing several alternate efforts. First and
    foremost, OI&T is working closely with VHA, VBA, and BVA on several
    system modernization efforts--including the BVA modernization effort--
    that improve the business processes, application of rules, and the
    replacement of out-of-date software applications with new technology. A
    summary of these efforts is included in this response.
        OI&T is also introducing a new development process called the
    Veteran-focused Integration Process (VIP). VIP utilizes an agile
    approach to software development with one single, unified, streamlined
    release process to deliver high-quality, secure IT capabilities to our
    Veterans. The VIP process will be governed by the new Enterprise
    Portfolio Management Office (EPMO). The EPMO provides a consolidated,
    enterprise-wide approach to identifying, selecting, prioritizing, and
    successfully executing a technology portfolio of projects. It will also
    emphasize the accumulation of domain knowledge by VA resources and the
    appropriate allocation of those resources to ensure that OI&T can react
    more quickly and efficiently to business changes.
        Once development is complete on the current suite of Benefits
    products, the expectation would be that any future enhancements would
    be able to be done more quickly and at a lesser cost. This is owed to
    the fact that these are being developed with a Service Oriented
    Architecture in mind which helps ensure changes are less extensive to
    accommodate new eligibilities.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                     ______

      Response to Posthearing Questions Submitted by Hon. Dean Heller to
                      U.S. Department of Veterans Affairs
        Question 34.  As you know, at the end of 2015, the Senate passed
    legislation to extend the one-year protection from foreclosure in the
    Servicemembers Civil Relief Act through 2017.
        Unfortunately, although there was support in 2012 and 2014 to
    ensure this one-year protection was maintained, the House has not yet
    acted on this legislation, resulting in the expiration of this
    protection at the end of 2015. Now, servicemembers only receive 90 days
    of foreclosure protection, right in the midst of their transition to
    civilian life.
        Do you believe this one-year protection from foreclosure is
    beneficial to veterans who are transitioning to civilian life? Are you
    supportive of an extension of the one-year protection from foreclosure?
        Response. The Servicemembers Civil Relief Act (SCRA) is intended to
    ease the economic and legal burdens on military personnel during their
    active service or at the conclusion of active service by postponing,
    suspending, or mitigating various types of obligations, including
    mortgage loans. This assistance is critically important as military
    personnel transition out of active service. VBA supports the extension
    of the one-year protection from foreclosure.
                                     ______

      Response to Posthearing Questions Submitted by Hon. Mike Rounds to
                      U.S. Department of Veterans Affairs
        Question 35.  The one-year protection from foreclosure in the
    Servicemembers Civil Relief Act expired at the end of 2015 and reverted
    back to 90 days. Congress acted in 2012 and 2014 to make certain the
    protection stayed at one year, and the Senate passed a bill to extend
    for two more years through 2017 but the House has not yet acted. Do you
    feel the one-year protection from foreclosure has been helpful to
    veterans as they re-acclimate to civilian life? Would you support an
    extension of the one-year protection from foreclosure?
        Response. The SCRA is intended to ease the economic and legal
    burdens on military personnel during their active service or at the
    conclusion of active service by postponing, suspending, or mitigating
    various types of obligations, including mortgage loans. This assistance
    is critically important as military personnel transition out of active
    service. VBA supports the extension of the one-year protection from
    foreclosure.
                                     ______

      Response to Posthearing Questions Submitted by Hon. Dan Sullivan to
                      U.S. Department of Veterans Affairs
                     veterans' choice, alaska pilot program
        Question 36.  Secretary McDonald, please expand on what progress
    has been made on the Alaska pilot program as of March 7, 2016.
        Response. We are making progress with the Alaska Choice Pilot
    Program. As of March 7, 2016, the contract revisions have undergone
    legal review, and we are in the process of defining and gathering data
    points for measuring success of the pilot. Furthermore, the hiring of
    additional staff to accommodate the need of the pilot is currently at
    75 percent complete.
        The Community Care Office developed and submitted a contract
    modification to the Denver Acquisition and Logistics Center (DALC)
    supporting a VA pilot in Alaska. The pilot program allows for Alaska
    VAMC staff to directly coordinate and schedule care using the TriWest
    network of providers.
        The DALC and VA's Office of General Counsel (OGC) recently
    completed a joint risk assessment of the modification to remove the
    contactors scheduling requirement. As of March 15, 2016, the DALC is
    reviewing the modification document and will submit to OGC for final
    concurrence and submission to the contractor for negotiations.
        On November 2, 2015, contract modification number 13 was signed.
    This modification authorizes TriWest to embed staff at selected VAMCs.
    Embedded staffing cell composition consists of two Care Coordination
    Assistants positioned to provide non-clinical support related to
    authorization entry, appointing and medical documents; and one
    Operations Manager responsible for supervising embedded staff while
    acting as the primary liaison with on-site VA staff.
        Since implementation, TriWest and VA have embedded staff at the
    following locations:

          New Orleans, LA VAMC--January 2016
          Dallas, TX VAMC--January 2016
          Anchorage, AK VAMC--January 2016
          Harlingen, TX VAMC--February 2016; Phoenix, AZ VAMC--
    February 2016.

        TriWest and VA are currently coordinating additional embedded
    staffing sites, which will be implemented over the next 60 to90 days in
    the following locations:

          Corpus Christi, TX Community-Based Outpatient Clinic
    (CBOC)
          McAllen, TX CBOC
          Fayetteville, AR VAMC
          Jackson, MS VAMC
          Gulfport, MS VAMC

        Initial feedback from VA sites that have already implemented
    TriWest embedded staff is positive because VA and TriWest are working
    together in a collaborative approach to improve customer service for
    Veterans, VA staff, and local providers.
                                 accountability
        Question 37.  Secretary McDonald, you've repeatedly said that in
    your leadership experience, you need to approach challenges by
    ``changing the culture.'' How does the reinstatement of directors Diana
    Rubens and Kimberley Graves speak to the larger process of changing the
    culture within the VA and how does it restore confidence in our
    veterans when it restores individuals with track records like theirs,
    to positions of leadership? How many employees have been fired within
    the VA workforce as of March 7, 2016 and how many are currently
    receiving disciplinary action?
        Response. The Department complied with an order by the Merit System
    Protection Board to restore Ms. Rubens and Ms. Graves as Directors in
    VBA's Philadelphia and Minneapolis regional offices . . .  The
    Department is demonstrably committed to improving accountability of its
    senior leaders within the established legal framework. While every
    outcome may not be what the Department envisions, these cases have not
    deterred our resolve to continue the reinvention of the Department's
    corporate culture. The Department will not tolerate misconduct on the
    part of its senior leaders and we will continue to seek corrective
    action where warranted.

         In calendar year 2014, VA terminated more than 1,100
    employees. In calendar year 2015, VA terminated more than 1,980
    employees. (Note: this includes removals and probationary
    terminations). As of June 28, 2016, we have 945 Probationary
    Terminations/Removals in calendar year 2016.
         VA has terminated 3,685 employees since Secretary McDonald
    was confirmed on July 29, 2014. (Note: this includes removals and
    probationary terminations as of 06/28/16).

    VA has initiated 450 disciplinary actions on any basis related to
    patient scheduling, record manipulation, appointment delays, and/or
    patient deaths nationwide, since June 3, 2014 (as reported on the
    June 3, 2016).
                                debt collectors
        Question 38.  Dr. Shulkin, I sent you a letter dated January 4,
    2016, regarding the issue of veterans in my state who have been hounded
    by collections agencies for unpaid bills. I brought this issue up the
    last time we met, and you committed to me at the field hearing in
    Phoenix back in December, that your office would intervene to make sure
    that doesn't happen. You committed to me again at the hearing on
    February 23, 2016 that addressing these claims would be a priority.
    This letter had pages of cases that I haven't gotten the answers to and
    there has been no communication with my state or DC staff since
    February. How and when do you plan on helping these veterans?
        Response. VA acknowledges that delayed payments and inappropriately
    billed claims are unacceptable and have caused stress for Veterans and
    providers alike. As a result of this issue, Veterans can now work
    directly with VA to resolve debt collection issues resulting from
    inappropriate or delayed Choice Program billing. In step with MyVA
    efforts to modernize VA's customer-focused, Veteran-centered services
    capabilities, a Community Care Call Center has been set up for Veterans
    experiencing adverse credit reporting or debt collection resulting from
    inappropriately billed Choice Program claims. Veterans experiencing
    these problems can call 1-877-881-7618 for assistance.
        The new call center will work to resolve instances of improper
    Veteran billing and assist community care medical providers with
    delayed payments. VA staff is also trained and ready to work with the
    medical providers to expunge adverse credit reporting on Veterans
    resulting from delayed payments to providers.
        VA is urging Veterans to continue working with their VA primary
    care team to obtain necessary health care services regardless of
    adverse credit reporting or debt collection activity. The new call
    center is the first step in addressing these issues. Veterans can find
    this number on the Veterans Choice Program website, http://www.va.gov/
    opa/choiceact/. VA also issued a news release regarding the call center
    and including the 800 number to call. Last, posters including
    information on the call center and the 800 number will be distributed
    to VAMCs and CBOCs nationwide.
        VA is urging Veterans to continue working with their VA primary
    care team to obtain necessary health care services regardless of
    adverse credit reporting or debt collection activity. There should be
    no administrative burden that stands in the way of Veterans getting
    care.
                                     ______

    Response to Posthearing Questions Submitted by Hon. Richard Blumenthal
                     to U.S. Department of Veterans Affairs
        Question 39.  VA's health care system, in particular, its research
    facilties, have historically been big draws to the best and brightest
    medical talent, but many clinicians are now discouraged from
    researching at VA because the facilities are in need of upgrading. The
    President's request for major and minor construction is $1.025 billion,
    including grants for state homes and cemeteries. This is a significant
    decrease from the $1.675 billion that was requested in FY 2016. Most
    noticeably, the major construction funding request dropped from $1.444
    billion in FY 2016 to $528 million in FY 2017. Given the sad state of
    VA's aging capital infrastructure, and its particular impact on
    researchers who often also provide direct care to veterans, how do you
    explain what amounts to an almost 40% decrease in your request for
    construction funding? Please provide your views on the recommendation
    in the Independent Budget that VA designate at least $50 million in its
    construction budget for upgrading its research facilities.
        Response. With the FY 2017 request, VA is continuing to fund
    critical Major construction projects that address access, patient
    safety, and seismic issues in Long Beach, California and Reno, Nevada.
    The request also includes new cemetery and expansion projects that
    expand the VA's ability to provide access to burial services and
    prevent the closure to new interments in existing cemeteries. VA is
    maximizing future flexibility by not committing to long-term solutions
    until the Department reviews the recommendations from the Commission on
    Care, expected June 2016.
        While the FY 2017 major construction funding request is less than
    last year, the request for all of VA's capital accounts--Major, Minor,
    and NRM--is only 5 percent less than the FY 2016 enacted level. VA is
    focusing on fixing our existing facilities by completing prior year
    minor and non-recurring maintenance (NRM) projects, including minor
    construction projects that enhance VA's research capabilities. VA is
    also exploring opportunities to engage partnerships opportunities that
    would reduce upfront capital expenses, resolve costly deferred
    maintenance, and provide potential lifecycle cost benefits. However,
    VA's authority to enter into such partnerships is presently limited to
    the Leasing, Enhanced Use Lease, and Historic Reuse programs. Expanded
    authority could support resolution of infrastructure deficiencies for
    some of VA's owned assets while providing an opportunity to realize net
    lifecycle savings.

        Question 40.  There is potential for care in the community to top
    $18 billion in FY 2018 (this was a figure derived from information
    contained in VA's October 30, 2015 report ``Plan to Consolidate
    Programs of the Department of Veterans Affairs to Improve Acess to
    Care''), which is $11 billion more than VA currently anticipates
    spending on traditional non-VA care.
        A. Please explain how VA expects to reduce spending on care in the
    community to $7.5 billion in FY 2018 without impacting access for
    veterans.
        Response. The FY 2018 Advance Appropriation request is an initial
    amount to enable VHA to begin the year if there is a continuing
    resolution, and VA expects to revisit the FY 2018 request in the FY
    2018 President's Budget. The Advance Appropriation allows VHA to avoid
    the functional limitations of operating under a Continuing Resolution
    or in the event of a government shut-down. Funding the Advance
    Appropriation allows VHA an initial budget to continue operations until
    the full appropriation amount is signed into law. The ``second bite''
    is intended for the administration to fully evaluate the resource
    requirements of the VA in context of the entire Federal budget.

        B. Please provide an estimate of the number of veterans VA
    anticipates will be using care in the community and their estimated
    reliance on VA facilities and providers for receiving health care in FY
    2017 and in FY18.
        Response. Based on increases since FY 2010, our projections show
    the unique number of Veterans using Community Care in FY 2017 and FY
    2018 to be:

    ------------------------------------------------------------------------
                                                        Projected Unique
                          FY                                Veterans
    ------------------------------------------------------------------------
    FY 2017.......................................                1,974,962
    FY 2018.......................................                2,216,217
    ------------------------------------------------------------------------

        Question 41.  One of the criticisms of the current Choice Program
    has been the need for improved coordination of care. VA recognized this
    in the New VCP when it highlighted the importance of robust care
    coordination tailored to each veterans's unique needs. I am encouraged
    that VA recognizes the need to ensure veterans and providers have
    access to a customer service system to help resolve any inquiries
    regarding care coordination. It is critical that VA facilities have
    staff available to support successful implementation of these efforts.
    Please discuss the rationale for not requesting funds for additional
    staff to implement the enhanced coordination of care efforts and how
    you intend to support those efforts with the current staffing levels.
        Response. The FY 2018 Advance Appropriation request is an initial
    amount to enable VHA to begin the year if there is a continuing
    resolution, and VA expects to revisit the FY 2018 request in the FY
    2018 President's Budget. The Advance Appropriation allows VHA to avoid
    the functional limitations of operating under a Continuing Resolution
    or in the event of a government shutdown. Funding the Advance
    Appropriation allows VHA an initial budget to continue operations until
    the full appropriation amount is signed into law. The ``second bite''
    is intended for the administration to fully evaluate the resource
    requirements of the VA in context of the entire Federal budget.

        Question 42.  The Veterans Service Organizations who publish the
    Independent Budget indicated in their written testimony that the
    Administration's proposal to simplify the VA disability claims appeals
    process raise many due process concerns. Please discuss the nature of
    the due process rights veterans have through entitlelemt to disability
    benefits and how the Administration's proposal to simplify the appeals
    process would affect these rights. Also, earlier this year, VA released
    a white paper on the Veteran Appeals Experience. This white paper
    seemed to indicate that veterans have little awareness of what their
    due process rights are. What steps is VA taking to preserve those
    rights in a way that veterans can understand?
        Response.
    Veteran Appeals Experience: Voices of Veterans and their Journey in the
            Appeals System
        In January 2016, VA Center for Innovation (VACI) completed a
    findings report on the appeals process for Veterans. To better
    understand how Veterans experience the appeals process--how the process
    fits into the context of their lives--a group of six researchers spoke
    at length with 92 Veterans whose service spanned the periods from World
    War II, Korea, and Vietnam, to the current conflicts in Iraq and
    Afghanistan.
        Researchers spoke to Veterans at every stage in the appeals
    process, from those receiving their initial decision to those with
    final, complete results from the Board. Some were new to the process.
    Others, such as those who had just had their hearings with the Board,
    were years into the process.
        Human-Centered Design methods were used to understand the needs,
    behaviors, and experiences of the Veterans in the appeal process.
    Researchers performed qualitative ethnographic and design activities,
    driven by a robust and evolving set of questions. Using design thinking
    and service design practices, researchers mapped, visualized, and
    synthesized the findings, which are detailed in the full report.
        After careful review of the Veteran interviews researchers formed a
    narrative on how Veterans view the appeals process. Veterans and their
    families struggle to understand the process or their place in it. They
    have little understanding of the relationship between steps in the
    process and sometimes don't even realize when they're making a
    decision--even if it might delay their appeal for years. They don't
    distinguish between Veteran Benefits Administration (VBA) and the
    Board; instead, they simply see VA. Even VSOs are occasionally viewed
    as part of VA. As is articulated in the Veteran Appeals Experience
    paper, Veterans do know that the VA appeal process is broken.
    Researchers found Veterans tended to see the process as adversarial,
    labor intensive, and filled with endless churn.
        VACI's research identified five key themes surrounding Veterans'
    needs, perceptions, and expectations in their experience with the
    appeals process. These insights can guide VA in redesign of appeals and
    related services that can better meet the needs of Veterans and their
    families.
        The themes, outlined in greater detail in the report, are:

        1) The length and labor of the process takes a toll on Veterans'
    lives.
        2) Like in the military, Veterans care deeply about the outcomes of
    other Veterans.
        3) Veterans feel alone in a process they don't understand.
        4) The appeals process feels like a fight.
        5) Veterans want to be heard.
    Overview of the VA Appeal Process
        The VA appeals process, which is set in law, is a complex, non-
    linear process that is unique from other standard appeals processes
    found in other judicial systems. The current VA appellate process has
    multiple steps, most of which occur at the agency of original
    jurisdiction (AOJ), such as, the VHA, VBA, or the National Cemetery
    Administration (NCA). If a Veteran is not satisfied with the initial
    AOJ determination, he or she may continue the appeal to the Board of
    Veterans' Appeals (Board) for a final agency decision. A feature of the
    current VA appeals process is an open record that, with only narrow
    exceptions, allows a Veteran, Survivor, or other appellant to submit
    new evidence and/or make new arguments at most points in the appeals
    process. Additionally, the duty to assist requires VA to develop
    further evidence on the Veteran's behalf and pursue new arguments and
    theories of entitlement. When new arguments are presented and evidence
    is added or obtained, VA generally must issue another decision
    considering the new arguments and evidence, which lengthens the
    timeline for final appellate resolution.
        The current VA appeals process takes too long, as there is no
    defined endpoint or timeframe; is too complex, as Veterans do not
    understand the process; and involves continuous evidence-gathering and
    re-adjudication that delays the Department in reaching a final
    decision. VA's appeals process essentially contains another claims
    process, as new contentions are picked up as part of the appeal, rather
    than initiated as a new claim.
        Sweeping legislative reform, in conjunction with modernization of
    appeals processing technology, is needed to ensure that Veterans
    receive timely and quality appeals decisions. With sweeping legislative
    reform, VA could provide Veterans with a simplified appeals process
    under which Veterans receive a final, fair appeals decision
    significantly faster than the current appeals process, which has no
    predictable end and can continue for many years. Conversely, if
    substantial legislative reform does not occur, Congress will need to
    provide significant sustained funding for VA to hire additional
    employees to apply the current inefficient process created by existing
    law to the constantly growing appeals workload.
        While business process improvements/initiatives will provide some
    assistance in streamlining the current inefficient appeals process, VA
    will not be able to keep up with the growing appeals workload without a
    significant sustained increase in resources or sweeping fundamental
    legislative reform. Such fundamental legislative reform is reflected in
    H.R. 5083. This legislation replaces the current appeals process with a
    new framework consisting of differentiated lanes, which give Veterans
    clear options after receiving an initial decision on a claim. One lane
    would be for a quick review of the same evidence by a higher-level
    claims adjudicator in the AOJ; one lane would be for submitting
    additional evidence with a new claim to the AOJ; and one lane would be
    the appeals lane for seeking review by a VLJ at the Board. Furthermore,
    hearing option and non-hearing option appeals at the Board would be
    handled on separate dockets so these distinctly different types of work
    can be better managed. In order to make sure that no lane becomes a
    trap for any Veteran that misunderstands the process or experiences
    changed circumstances, a Veteran who is not fully satisfied with the
    result of any lane would have one year to seek further review while
    preserving an effective date for benefits based upon the original
    filing of the claim. For example, a Veteran could go straight from an
    initial AOJ decision on a claim to an appeal to the Board. If that
    decision were not favorable, but it helped the Veteran understand what
    evidence was needed to support the claim, then the Veteran would have
    time to submit that evidence to the AOJ in a new claim without fearing
    an effective-date penalty for choosing to go to the Board first.
        Importantly, this legislative reform protects the due process
    rights of Veterans by ensuring that Veterans are provided clear and
    detailed notice when a claim is decided. This new design also contains
    a mechanism to correct duty to assist errors by the AOJ. If the higher-
    level claims adjudicator or Board discovers an error in the duty to
    assist that occurred before the AOJ decision being reviewed, the claim
    would be returned to the AOJ for correction unless the claim could be
    granted in full. The Secretary's duty to assist would not apply to the
    lane in which a Veteran requests higher-level review by the AOJ or
    review on appeal to the Board. The duty to assist would, however,
    continue to apply whenever the Veteran initiated a new claim or
    supplemental claim. For Veterans who want to submit additional evidence
    following an AOJ decision on a claim, there would be two options; they
    could either submit additional evidence with a supplemental claim or
    file a timely appeal to the Board and elect the Board ``hearing option
    lane'' which would allow the Veteran to testify at a Board hearing and
    submit evidence at the Board hearing or within 90 days thereafter.
    Alternatively, a Veteran on the hearing option docket could choose to
    submit additional evidence within 90 days of filing a notice of
    disagreement without requesting a Board hearing. Stakeholder support is
    needed to provide appellants this modern, efficient appeal process that
    is consistent with VA's goals for the initial claims process.
    History of the VA Appeal Process
        The current appeals adjudication process has evolved over nearly a
    century from the WWI system originally managed by the Bureau of War
    Risk Insurance. During most of this evolution, decisions on Veterans
    claims were final and no court had authority to review the agency's
    decisions. Veterans first received the right to seek judicial review of
    agency decisions on their claims in the 1988 enactment of the Veterans'
    Judicial Review Act (VJRA) (Public Law 100-687). The VJRA established
    judicial review of VA decisions in a new court now known as the United
    States Court of Appeals for Veterans Claims (CAVC); maintained the
    Board as the final adjudicator within VA; abolished the $10 limit on
    attorneys' fees for representing Veterans in certain claims; and
    created additional levels of judicial review in the United States Court
    of Appeals for the Federal Circuit (Federal Circuit) and the United
    States Supreme Court.
        Judicial review of VA's decisions has had both positive and
    negative effects for VA and claimants. Judicial review has been
    beneficial for Veterans by providing them with their ``day in court.''
    It has also created a forum for debating the interpretation of Veterans
    benefits law and the validity of VA's regulations, resulting in a
    significant body of case law on Veterans' benefits issues.
        However, judicial review has also significantly complicated VA's
    administration of its benefits programs, resulting in significant
    delays in the initial claim and appeal processes. The processes that
    were developed in the decades after WWI were not designed to be
    compatible with judicial review. As a result, the interpretation of
    statutes and regulations that often date to WWI or WWII has led to many
    unexpected results that have been difficult to integrate into the
    decades of procedures that have accumulated. Specifically, the
    applicable law as developed primarily by precedential CAVC and Federal
    Circuit decisions is constantly increasing in complexity. As a result,
    Board decisions are lengthier, more complex, and require more time and
    resources to prepare than ever before. While there are a number of CAVC
    decisions that affect the timeliness of the claim and appeal processes,
    the most significant factor has been the CAVC's interpretation of VA's
    statutory duties to assist and notify, which have substantially
    increased the number of remands to the Board and VBA.
    Current Statutory Framework
        It is important to understand the current framework that has been
    built up in stages since WWI. The VA appeals process divides
    responsibility between VBA and the Board. In brief, it is not a closed
    or linear process. The appeal process provides redundant reviews of the
    initial decision, and the process does not move in one direction to a
    set conclusion. The claimant pays no fee to utilize the VA appeals
    process and there is no limit to the number of appeals that can be
    submitted. New evidence may be submitted or obtained at virtually any
    time and an appeal may have to go through multiple cycles of
    development and re-adjudication to be resolved.
                                      vba
        A claimant may initiate VA's administrative appeal process by
    filing a NOD with VBA regarding a specific VBA decision. Section
    7105(b)(1) of title 38, U.S.C., provides claimants with a one-year
    period, beginning on the date that VA issued the decision, in which to
    file a NOD.
        Under section 7105(d)(1), when VBA receives a NOD, it initiates a
    fresh review and undertakes any development required for additional
    evidence submitted with the appeal in an attempt to resolve the
    disagreement. If VBA's further action regarding the appealed claim does
    not resolve the disagreement, it must issue a Statement of the Case
    (SOC), which must include a summary of the evidence, citation to
    pertinent laws and regulations, a discussion regarding how VBA applied
    the law to the facts of the claim, a decision on each issue in the
    appeal, and a summary of the reasons for the decision on each issue.
    Claimants may then file a substantive appeal within 60 days of the date
    VBA issued the SOC or within one year of the date of VBA's initial
    decision, whichever is later, which completes the formal appeal for
    certification and transfer of jurisdiction to the Board.
        VA has interpreted its authority under section 7105 as allowing
    claimants who filed an NOD to elect either a traditional appeals
    process or a first level of de novo review within VBA by a Decision
    Review Officer (DRO). If a claimant elects a DRO review, a VBA employee
    who processes appeals re-adjudicates the claim and issues a decision
    granting the benefits on appeal or an SOC confirming the prior
    decision. A claimant who elects a DRO review and remains dissatisfied
    with VA's decision may still file a substantive appeal to the Board and
    receive another de novo review of the claim.
        A claimant may submit additional evidence to support an appealed
    claim at virtually any point in the process, regardless of whether the
    appeal is pending at VBA or the Board. If additional evidence is
    received after the claimant files a NOD but before VA issues the SOC,
    the evidence will be reviewed by VBA and incorporated into the SOC (if
    VBA cannot grant benefits). Evidence that an appellant identifies after
    VBA issues an SOC will result in VA issuing a supplemental SOC (SSOC).
    Each time the claimant identifies additional evidence; VBA must
    reconsider its decision on the appealed claim and conduct any necessary
    development of the claim under its duty to assist the claimant. If
    VBA's reconsideration of the appealed claim does not resolve the
    disagreement, it will issue another SSOC.
        There is no limit to the number of times a claimant may identify
    additional evidence that may require VA to repeat this process.
    Accordingly, many appealed claims require several SSOCs, depending on
    the number of times that the claimant identifies additional evidence.
    Identification of additional evidence during the appeal process often
    results in multiple reviews and re-adjudications of an appeal before
    VBA is in a position to transfer it to the Board for its de novo
    review. In FY 2015, each additional SSOC added, on average, more than
    360 days to the total appeal processing time.
                                   the board
        Under 38 U.S.C. Sec. 7104(a), VBA's decisions are subject to one de
    novo review on appeal to the Board. In general, this right of review
    requires evidence to be considered by VBA in the first instance before
    a case can proceed to the Board. However, when the Board receives an
    appeal, it reviews the entire record on the claim and does not give any
    deference to a prior VBA decision. The Board will either issue a
    decision granting or denying the benefit, or will remand the claim back
    to VBA for additional developmental action. Approximately 60 percent of
    the decisions that are remanded to VBA are a result of additional
    evidence or information becoming available, or a change in
    circumstances that arose after the claim was certified to the Board. As
    discussed above, claimants may submit additional evidence at virtually
    any time during the process, regardless of whether the appeal is at VBA
    or the Board. This submission of additional evidence and other inherent
    delays in the appeal process often cause the Board to remand the claim
    to VBA for a new examination or a search for previously unidentified
    records, which causes further ``churning'' of the appeal. Furthermore,
    if the Board identifies an error in evidence gathering, the case must
    be returned to VBA to repeat the development and adjudication process
    before being returned to the Board.
        In July 2003, VBA created its Appeals Management Center (AMC) for
    the purpose of consolidating remands from the Board at a single office
    for more efficient and consistent processing. The AMC has the authority
    to develop additional evidence regarding remanded claims and issue new
    decisions. If the AMC is unable to issue a full grant of benefits, it
    will issue a supplemental SOC and recertify the appeal to the Board for
    continuation of the administrative appeal process. Currently, the AMC
    processes approximately 65 percent of the Board's remands to VBA. VBA's
    regional offices process the remaining remands, including remands in
    claims where the appellant has asked for a hearing or a private
    attorney represents the claimant.
        The current process (see Figures 1 and 2) provides appellants with
    multiple reviews in VBA and one or more at the Board depending upon the
    submission of new evidence or whether the Board determines that it is
    necessary to remand the matter to VBA. Although VA has allocated
    significant resources to the appeals workload, the multi-step, open-
    record appeal process set out in current law precludes the efficient
    delivery of benefits to all Veterans. Further, the longer an appeal
    takes, the more likely it is that the claimed disability will change,
    resulting in the need for additional medical and other evidence and
    further processing delays. As a result, the length of the process is
    driven by how many cycles and re-adjudications are triggered.
     Figure 1: Illustrating the entire appeal process, including judicial
                                    review.
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        ** In FY 2015, each additional SSOC added, on average, more than
    360 days to the total appeal processing time.

                                   Figure 2:
       Illustrating the complex administrative appeal process created by
                                  current law.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                judicial review
        As noted above, claimants have had the right to judicial review of
    VA's decisions on their claims since 1988. If an appellant is
    dissatisfied with a final Board decision on a claim, the appellant may
    appeal to the CAVC within 120 days of the date of the decision.
    Further, limited review is available in the Federal Circuit and Supreme
    Court. The 1988 legislation placed judicial review on top of the layers
    of procedures that had evolved since WWI.
                                     claims
        If the Veteran disagrees with any or all of the final appeals
    decision, the Veteran always has the option of filing a claim to reopen
    for the same benefit once the appeal is resolved.
    Proposals for a New VA Appeals Framework
        There are three key elements that the new appeals framework would
    impact: VA's duty to assist, submission of evidence, and effective date
    provisions. Over the years, laws have changed to add layers of process
    to protect the interests of Veterans. However, those protections are no
    longer serving Veterans well since these laws have affected the timely
    and efficient resolution of appeals.
        Under current statutes, Veterans have the right to submit or
    identify evidence and pursue new arguments of entitlement at virtually
    any point throughout the appeals process. Under its statutory duty to
    assist, VA is obligated to develop and gather the evidence for the
    Veteran and re-adjudicate the appeal each time. Further, current
    effective date statutes provide an effective date of benefits that is
    retroactive to the date of the filing of the initial claim, as long as
    a Veteran files a timely appeal that eventually results in an award.
    Therefore, the current process incentivizes the continual submission of
    new evidence. Continuous evidence-gathering and the additional duty to
    assist triggered by the submission of evidence delay a final decision
    and result in many cycles of re-adjudication. In many instances, the
    additional steps in the process not only add little or no value, but
    actually harm Veterans by delaying an otherwise favorable decision
    while additional process is pursued. Hence, VA's appeal system differs
    from other Federal agency and judicial appeal processes, which limit
    the appeal review to evidence included in the record at the time of the
    initial decision.
        By modernizing and simplifying the appeals system, Veterans would
    be afforded a transparent appeals process with a single VA appeals
    owner, rather than trying to navigate a multi-step process that is too
    complex and too difficult to understand.
        VA has brought together the Nation's leading Veteran advocacy
    groups for their input. They are our steadfast partners in improving
    the way we deliver services to Veterans.
        As a result of that collaboration, VA has put forward a new
    proposal that would provide veterans with a simple, fair, and
    transparent appeals process in which, with the appropriate resources
    provided by Congress in future appropriations, the vast majority would
    receive a final appeals decision within one year of filing an appeal by
    2021. This disentanglement of process is enabled by one crucial
    innovation--giving veterans multiple paths to adjudicate disputes on a
    claim, while preserving the effective date that the initial claim was
    filed. VA's consensus proposal was put forward as a discussion draft by
    Ranking Member Blumenthal and was the subject of the Committee's
    May 24, 2016, legislative hearing.
        This legislation would modernize the Veteran appeals process,
    better serving veterans, taxpayers, and the Nation for years to come.
    And since it was layer upon layer of law that got us tangled, VA will
    need Congress' help to untangle it, and has been working to make this
    legislative change a reality, and soon. The principles of this
    consensus proposal are as follows:

       The New Appeals Framework Provides Five Key Benefits for Veterans
        I. Improved Communications: In order to make an informed and
    intelligent choice as to which review option is the most beneficial,
    Veterans will need a clear and detailed Decision Notice when a claim is
    decided. We have identified eight elements needed to draft a
    comprehensive notice to Veterans.
              1. Issues adjudicated
              2. Evidence considered
              3. Statutes and regulations considered
              4. Identification of findings favorable to the Veteran
              5. Findings as to which element(s) were found not to have
            been satisfied leading to the denial of the claim including an
            explanation of how the evidence was weighed
              6. Notice of how to obtain a copy/access to the evidence used
            in making the decision
              7. Notice of the criteria that must be satisfied to grant the
            claim
              8. Notice of appellate rights and all procedures available to
            seek further review
        II. Effective Date Protection: The new system will protect a
    Veteran's potential effective date while he or she considers the
    different options available. Choosing one lane over another lane (See
    Choice below) does not prevent a Veteran from later choosing a
    different lane.
        III. Choice: The new model provides Veteran's with three options
    (Lanes) after every VBA Decision. These Lanes are designed to allow
    Veterans to choose the option that best suits their particular need.
              1. A Difference of Opinion Review/Higher Level Review by the
            AOJ (within VBA)
              2. An option to submit New Evidence (within VBA)
              3. The right to Appeal to the Board of Veteran Appeals
            (Board)
        IV. Early Resolution: The new approach is designed to facilitate
    early resolution of Appeals at the RO level--through options 1 and 2--
    rather than driving Appeals through a single process which leads to and
    through the Board.
        V. Timely Resolution
              1. The focus on early resolution and a 125 day turn-around
            goal within the two VBA lanes will dramatically reduce the time
            to resolution for many Appeals.
              2. The Board will provide 1) an Expedited Review docket for
            claimants who simply wish for a review on existing evidence,
            and 2) an Alternate Review docket which allows for hearings and
            the submission of new evidence.

        Question 43.  The American Legion's written testimony highlights
    the importance of the Decision Review Officers at the VA Regional
    Offices as one of the most efficient ways for a veteran to resolve an
    appeal. As VA has attempted to reduce the backlog of claims, many DROs
    have been assigned to focus on claims rather than appeals, reducing the
    number of employees available to process appeals. VA's proposal for
    reforming appeals seems to remove many of the functions of the Regional
    Office from the appeals process altogether. Under VA's proposal for a
    simplified appeals process, would DROs work on claims or appeals?
        Response. The new appeals framework described in H.R. 5083 sets up
    three ``lanes'' or options for Veterans following an unfavorable AOJ
    decision. The DRO review would be eliminated in the new appeals
    framework; however, Veterans would have two options for further review
    of their claim at the AOJ, by either choosing higher level review by
    the AOJ or by filing a supplemental claim with new evidence.
        Veterans would have up to one year from an initial claim decision
    to seek local review of the decision by a higher-level adjudicator. No
    new evidence or hearings would be permitted at this stage and the
    adjudicator would have the authority to grant the claim based upon a
    difference of opinion. However, the Veteran's representative would have
    the option to request an informal conference with the decisionmaker for
    the purpose of pointing out specific errors in the case.
        If during the review, the higher-level adjudicator finds a duty to
    assist error, and that error occurred prior to the AOJ decision being
    reviewed, the adjudicator would send the case back to the lower level
    to correct any errors found and re-adjudicate the claim.
        The level of the higher-level adjudicator would depend upon the
    complexity of the claim, but would be higher than that of the initial
    adjudicator. The Veteran could elect whether this adjudicator was from
    his or her local RO or from a different RO.
        The effective date of the initial filing of the claim would be
    protected if the outcome of the review is favorable to the Veteran. If
    the outcome of the review is unfavorable, the Veteran would have one
    year from the date of the higher-level review decision to submit new
    evidence with a supplemental claim or file an appeal with the Board.
        As an alternative to higher-level review, upon receiving a
    decision, Veterans would have up to one year to submit new evidence
    with a supplemental claim. The Veteran could also request a local
    hearing to submit testimony. An RO adjudicator would consider the new
    evidence and issue a new decision, while preserving the effective date
    associated with the initial claim. If Veterans remain dissatisfied with
    the decision, they would still have the option to appeal to the Board,
    seek local review by a higher-level RO adjudicator in the difference of
    opinion lane, or file another supplemental claim with new evidence.
        This new appeals framework allows Veterans who have received an
    unfavorable AOJ decision to make a choice regarding the most
    appropriate review for their situation, and provides more options than
    the current legal framework.
                                     ______

     Response to Posthearing Questions Submitted by Hon. Sherrod Brown to
                      U.S. Department of Veterans Affairs
        Question 44.  As you know a 2014 HELP Committee report revealed
    that eight of the top 10 recipients of Post-9/11 GI Bill benefits are
    large, publicly-traded companies that operate for-profit colleges who
    had received 23 percent of all Post-9/11 GI Bill benefits ($975
    million) in 2012-13. Has this changed in the intervening time since
    this report was published? For the most recent year for which data is
    available, how many of the top 10 recipients of Post-9/11 GI Bill
    benefits are for-profit colleges?
        Response. Based on Fiscal Year 2015 data, five of the top 10
    recipients of Post-9/11 GI Bill tuition and fee payments are for-profit
    schools. These five schools received a total of $301,679,948 in tuition
    and fee payments and represent over 60 percent of the total tuition and
    fee payments to the top 10 recipients of the Post-9/11 GI Bill. These
    schools also represent 10 percent of all Post-9/11 GI Bill tuition and
    fee payments in 2015. Please see the table below for the top 10 highest
    paid schools.

    ------------------------------------------------------------------------
                                                              Total Tuition
            Name of Institution            Profit Status      and Fees Paid
    ------------------------------------------------------------------------
    University of Phoenix-Online Campus  Private profit      $135,107,635.20
    American Public University System..  Private profit       $55,544,751.53
    University of Maryland-University    Public               $45,083,484.47
     College.
    Full Sail University...............  Private profit       $40,276,319.58
    Ashford University-On Line.........  Private profit       $39,886,727.16
    Southern Utah University...........  Public               $38,084,999.78
    Liberty University.................  Private non-         $37,246,788.32
                                          profit
    Arizona State University-Tempe.....  Public               $34,169,659.32
    University of Phoenix-Southern       Private profit       $30,864,515.37
     California Campus.
    National University-San Diego......  Private non-         $29,959,505.74
                                          profit
    ------------------------------------------------------------------------
    Data Source: 2015 CBS Report

        A. This same HELP Committee report also found that taxpayers are
    paying twice as much on average to send a veteran to a for-profit
    college for a year compared to the cost at a public college or
    university. Is this still the case?
        Response. Yes, with regard to tuition and fees paid to schools, VA
    pays twice as much on average to send a Veteran to a for-profit college
    for a year compared to the cost at a public college. Please see table
    below for the average amount paid to schools (for tuition and fees) per
    student in FY 2015.

    ------------------------------------------------------------------------
                                                      Tuition    Average per
                    Type of School                   and Fees   Student in a
                                                       Paid         Year
    ------------------------------------------------------------------------
    For-profit schools............................     $2.0B      $8,254
    Public schools................................     $1.7B      $4,362
    ------------------------------------------------------------------------
    Data Source: 2015 CBS Report

                                     ______

    Response to Posthearing Questions Submitted by Hon. Mazie K. Hirono to
                      U.S. Department of Veterans Affairs
                              veteran homelessness
        Question 45.  Current estimates from the Department of Housing and
    Urban Development indicate that approximately 48,000 veterans are
    homeless on any given night. Meanwhile, the National Coalition for
    Homeless Veterans indicates that approximately 1.4 million other
    veterans are at risk of homelessness. Could you elaborate on how you
    envision the VA's transformation strategy will work to better
    collaborate with DOD to prevent further instances of homelessness among
    transitioning veterans?
        Response. In collaboration with DOD and the United States
    Interagency Council on Homelessness, VA VHA Homeless Programs Office
    and Care Management and Social Work Services has developed a new
    initiative to prevent and end homelessness among Transitioning
    Servicemembers. This new holistic approach to transition preparation
    includes Servicemembers planning for post-separation finances, housing,
    transportation, employment, and family and social support. For those
    Servicemembers who are determined to be at risk of homelessness, a
    referral will be made to a VA medical facility for the coordination of
    health care and housing services facilitated by the Transition and Care
    Management (TCM) team.
        Key to this initiative are the VA Liaisons for Health Care,
    licensed social workers or registered nurses, who are strategically
    placed in Military Treatment Facilities (MTF) with high concentrations
    of ill and/or injured Servicemembers and those returning from combat.
    VA has 43 VA Liaisons for Healthcare stationed at 21 MTFs to facilitate
    the transfer of Servicemembers from the MTF to a VA health care
    facility closest to their home or most appropriate location for the
    specialized services their medical condition requires. VA Liaisons are
    co-located with DOD Case Managers at MTFs and provide onsite
    consultation and collaboration regarding VA resources and treatment
    options. VA Liaisons meet with Servicemembers directly to discuss the
    VA system of care and the individual's health care needs. VA Liaisons
    provide direct access to care for transitioning Servicemembers and
    ensure that VA care is personalized, proactive, and patient-driven to
    meet the unique needs of each new Veteran. If housing needs are
    identified at the time of transition, VA Liaisons communicate this
    information to the receiving VAMC so ongoing services can be
    coordinated. The goal with each referral is for the Servicemember to
    leave the MTF registered for VA health care with a scheduled VA
    appointment.
        At sites without a VA Liaison for Healthcare, a VA Benefits Advisor
    will make a warm handoff to a Homeless Prevention point of contact at
    the VAMC who is an expert at identifying and accessing VA and community
    homeless resources.

        Question 46.  It is encouraging to see that the President's FY 2017
    budget includes $1.6 billion for programs that will continue VA's
    efforts to end veterans' homelessness. I also appreciate the work that
    VA has done to reduce veterans' homelessness in the last several years,
    whereas Veteran homelessness has declined by 36% between 2010 and 2015.
    What kind of impact does VA project toward lowering the rate of
    homeless veterans throughout the Nation with the requested funding
    level?
        Response. The kind of progress reflected in the declining Point-in-
    Time estimates affirms that the strategies and systems that VA,
    together with the Department of Housing and Urban Development and
    community partners, has implemented are working. The requested increase
    in the FY 2017 VA homeless-services budget request is needed to sustain
    its continuum of care for not only homeless and at-risk Veterans but
    for those Veterans who have obtained permanent housing yet still
    require supportive services in order to maintain housing stability. VA
    has made unprecedented efforts to promote the services available to
    Veterans who are homeless or might become homeless. As a result of the
    success of the effort and targeted resources, more Veterans than ever
    before are seeking out VA. Since 2010, demand for VA homeless-related
    services has increased by 136 percent (FY 2010: 127,070--FY 2015:
    300,108 Unique Veterans accessing VHA homeless services). There has
    been a 7.8 percent increase in demand for homeless services since this
    time last year (January 2015: 164,224 to January 2016: 178,139).
        Communities that have reached the goal or are close to effectively
    ending homelessness rely heavily on VA targeted homeless resources.
    Communities that have developed a sustainment plan are dependent on
    those resources to remain available as they continue to tackle
    homelessness. The systems we have in place will make sure that the
    experience is measured not in months or years, but in days if
    sustained. Therefore, VA remains focused on ensuring adequate resources
    that address the needs of Veterans who may become or are at-risk of
    homelessness and sustain the supports for Veterans who have moved into
    permanent housing so that they maintain housing stability and do not
    fall back into homelessness.
                     dod/va health record interoperability
        Question 47.  Secretary McDonald, in your testimony you indicate
    that one of VA's breakthrough outcomes for 2016 is to finalize
    congressionally mandated DOD/VA interoperability requirements at the
    Office of Information and Technology. Could you comment on the specific
    metrics that VA is using to measure interoperability? What is the 2016
    timeline for when these requirements will be fulfilled?
        Response. Our key measure of interoperability between VA and DOD is
    a clinician's ability to access all health information required to
    provide optimal care for Veterans and Servicemembers. To ensure we are
    exchanging this information effectively, the DOD/VA Joint
    Interoperability Plan (JIP) includes details regarding the Departments'
    efforts to standardize terminology, content, exchange methods, and
    access to shared health information. The JIP also addresses the
    Departments' efforts to exchange health information securely, flexibly,
    and in compliance with national standards and relevant privacy laws.
    Currently, JLV is used by both VA and DOD for a complete view of a
    Veteran or Servicemember's longitudinal record. Later this year, JLV
    will also provide direct access to radiographs and other images.
    Imaging study reports are already included in JLV today. As VA
    continues improving our point-of-care health record interface with the
    enterprise Health Management Platform, all current capabilities of JLV
    will be included in the new system.
        The Departments certified that we have achieved the interoperable
    capability required in Section 713 (b)(1) of the 2014 National Defense
    Authorization Act on April 8, 2016,--approximately 8 months ahead of
    the deadline.
        The summary of Interoperability Metrics and Milestones, extracted
    from the JIP, is embedded below for additional detail.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                             automation of benefits
        Question 48.  In your testimony, you highlight the need to simplify
    the VA appeals process. As a result of automating burial benefits, you
    state that the Department was able to reduce the time spent processing
    these benefits from 190 days to 6. This Congress, in collaboration with
    VA, I introduced the Veteran Survivors' Claims Processing Automation
    Act which passed out of this Committee last month. The bill would
    provide the Department with the authority to automate the claims
    process for dependency and indemnity compensation, survivors' pensions,
    and payments of accrued benefits. In the context of your 2016
    Breakthrough Outcomes for Appeals, would you be able to comment on the
    impact that automating these benefits would have on decreasing
    processing time, and assisting the VA in meeting its goal of completing
    90 percent of appeals within one year of filing by 2021? Can you
    comment on the budgetary impact you anticipate that streamlining
    programs in this manner would have on the VA, and the positive impacts
    that it would have on veterans' services by improving the timeliness
    and quality of benefits delivery?
        Response. The overall intent of automating survivors' benefits is
    to grant the benefit without the need for the survivor to submit an
    application. Because of the unique adjudication process of appeals, VBA
    cannot implement automation at the time a survivor files an appeal.
    Many of these appeals require a detailed analysis of multiple types of
    evidence before a decision is reached. Automation does not lend itself
    well to this type of review. Additionally, since nearly 98 percent of
    all pending VA appeals involve disability compensation benefits, the
    impact from automating survivor appeals would be minimal.
                 board of veterans' appeals chairman nomination
        Question 49.  Making significant progress on the veteran claims
    backlog is a key part of your 2016 breakthrough outcomes however the
    Board of Veterans' Appeals has not had a Senate-confirmed Chairman
    since the departure of the late James Terry in 2011. Laura Eskenazi was
    designated by Secretary Eric Shinseki as Executive in Charge and Vice
    Chairman of the Board of Veterans' Appeals (BVA), on June 30, 2013.
    Since the beginning of the 114th Congress, the Senate has not received
    a nomination for BVA Chairman. Are there plans to submit to the Senate
    a nominee for BVA Chairman in 2016?
        Response. VA acknowledges that leadership for the Board of
    Veterans' Appeals is important as we move critical initiatives forward.
    Nomination of the Chair, Board of Veterans' Appeals is a process
    executed by the White House, and we therefore defer to the White House
    on this matter.
                        telehealth/hepatitis c treatment
        Question 50.  Secretary McDonald, you note in your testimony that
    with its $1.5 billion request in FY 2017, VA expects to treat 35,000
    patients with Hepatitis C and that VA will focus resources on the
    sickest patients and most complex cases and continue to build capacity
    for treatment through clinician training and use of telehealth
    platforms. Could you elaborate on how telehealth will be expanded and
    how it will impact treatment?
        Response. VHA currently operates multiple Hepatitis C and liver
    Telehealth programs, both within and across VISNs. These include
    traditional provider-patient Telehealth visits, in which the patient is
    seen through a video link at one VAMC by a Hepatitis C provider at
    another VAMC. They also include Tele-consultation models using VHA's
    highly successful SCAN-ECHO program, in which primary care physicians
    at a VAMC or CBOC present Hepatitis C cases to an expert team at
    another VAMC and receive didactic training, enabling them to become
    experienced Hepatitis C treaters. Preliminary data from VHA's Hepatitis
    C SCAN-ECHO program show significant increases in patient access,
    decreases in travel time, and most importantly, cure rates similar to
    those achieved by experienced VHA Hepatitis C providers.
        VHA is planning and executing expansion of these programs as
    rapidly as possible. Expansion will use geomapping to target sites that
    report patient access difficulties due to geographic constraints or
    limitations in provider resources as well as relatively low proportions
    of Veterans treated. Expansion will involve meetings between the VHA
    National Viral Hepatitis Program Office and National Telehealth Program
    Office with clinical staff at such sites to guide deployment and
    implementation of Telehealth resources, recruitment of experienced
    Hepatitis C providers to deliver Hepatitis C Telehealth care, use of
    peer support groups for remote treatment of Veterans, and updating the
    existing national liver/Hepatitis C Telehealth guide. VHA will also
    leverage its existing provider to provider training programs, including
    its Hepatitis C SCAN-ECHO program, to buildupon existing provider
    capacity to treat Hepatitis C; the National Viral Hepatitis and Primary
    Care Programs are collaborating to refine a Hepatitis C curriculum for
    VHA primary care providers. Based on the data from existing programs,
    we anticipate that this expansion will improve access to Hepatitis C
    and liver care, particularly among Veterans residing in rural and
    highly rural areas.
        Chairman Isakson. We have a second panel that will come
    forward. If the second panel will move forward?
        I appreciate your time this morning. [Pause.]
        I would like to welcome our second panel, and, again, I
    appreciate the Secretary staying for the second panel. We have
    our veterans service organizations, which are critically
    important to us on the VA Committee. We have The American
    Legion in town today. I was with them earlier this morning, and
    I appreciate their support for the Veterans Administration and
    for this Committee.
        We have: Mr. Carl Blake, the Associate Executive Director
    of Government Relations, Paralyzed Veterans of America; Paul
    Varela, Assistant National Legislative Director, Disabled
    American Veterans; Ray Kelley, the Director of the National
    Legislative Service, Veterans of Foreign Wars; and Mr. Louis
    Celli, Jr., National Director of Veterans Affairs and
    Rehabilitation, The American Legion.
        Mr. Blake, we will begin with you.

        STATEMENT OF CARL BLAKE, ASSOCIATE EXECUTIVE DIRECTOR,
          GOVERNMENT RELATIONS, PARALYZED VETERANS OF AMERICA

        Mr. Blake. Thank you, Mr. Chairman. On behalf of the co-
    authors of The Independent Budget--DAV, PVA, and VFW--I would
    like to thank you for the opportunity to testify today. You
    have a copy of our joint statement that we submitted for the
    record, so I will limit my comments primarily to the medical
    care section of the VA's budget and to the recommendations of
    the IB.
        Let me say first and foremost that overall we believe that
    the VA's budget is a good one. I think in many ways it mirrors
    the recommendations of the independent budget for this year,
    particularly when you take into account the amount of money
    that the VA projects to spend from Section 801 and Section 802
    of the Choice Act as well. It brings the numbers up pretty
    close. The one exception to that would certainly be the
    infrastructure portion. I will leave the comments on that to my
    colleague with the VFW.
        Let me say, though, that we do have some real concerns
    about this continued escalated growth in funding in community
    care. This year, the VA introduced its new medical community
    care account. When coupled with the Choice Act, they project to
    spend nearly $12.2 billion on care in the community this year.
        It is fair to say that we understand the need to leverage
    community care as best as possible to expand access. The
    independent budget framework that we have already discussed
    with the Committee staff outlines some of our ideas in that
    same way, much as the VA's new Veterans Choice Plan also
    addresses the issue.
        However, we are concerned about what is the potential for
    uncontrolled growth in this area. While the Congress and the
    Administration seem to be keenly focused on expanding access in
    the community, I do not think we can emphasize enough the need
    to devote critical resources and focus also on expanding the
    existing capacity of the VA and the staffing levels of the VA
    health care system, particularly in the areas of specialized
    services like spinal cord injury or disease. Just outsourcing
    the care into the community, while it might seemingly improve
    access, runs the risk of undermining the larger health care
    system, which many veterans, particularly those with
    catastrophic disabilities, rely upon.
        One interesting note that I'd like to point out is in the
    VA's budget this year, they project for fiscal year 2016 to
    spend about $1.7 billion in Section 802 Choice funding. That is
    the community care portion of Choice. When we asked them about
    it during their budget briefing, they admitted that they
    actually project to spend $2.3 billion or more in Choice Act
    funding for community care this year. But, their budget does
    not seemingly square those two facts, which begs the question:
    where will the additional money come from? The obvious easy
    answer would be the remaining balance of the Choice Act. Then,
    that would call into question, how does that impact the $4.8
    billion in Choice funding that they are projected to spend in
    fiscal year 2017 for community care?
        We have real concerns about how the Choice Act funding is
    going to be broken up. Certainly last year, with the massive
    budget shortfall, that caused some significant difficulties
    when figuring out how to manage the Choice Act funding line. We
    will be keeping a close eye on how that impacts care going
    forward.
        With these thoughts in mind, we also have some real
    concerns about the funding level for fiscal year 2017 that was
    approved in the advance appropriation in December of last year.
    While the IB recommends approximately $72.8 billion for medical
    care for 2017, that advance appropriation only included about
    $66.6 billion. That is a lot of money no matter how you look at
    it. But, the fact is the VA revised its estimate for 2017,
    necessarily so, we believe, to a much higher and much more
    significant level, we believe reflective of the actual need
    that they project to have for 2017. Unfortunately, we believe
    that we are setting up the scenario where the very same
    shortfall problems that we experienced last summer may rear
    their head again in this fiscal year, 2016, and potentially
    again in 2017 this advance appropriation level is not
    appropriately addressed. We hope this Committee will take a
    serious look at that and consider that as you put together your
    views and estimates.
        Last, we are concerned about the 2018 advance appropriation
    level. When we questioned the VA on what we felt like was
    clearly an insufficient level for 2018 for all of medical care,
    they sort of half-heartedly admitted that they do not believe
    it is going to be sufficient either, which is kind of
    befuddling to us. If you took the historical perspective that
    that is OK because it will be corrected, that is not a fair way
    to look at this. While the last 2 years Congress has adjusted
    the advance appropriation in many appropriate ways, the four
    previous years to that Congress did not adjust by a single
    dollar the advance appropriation for health care, particularly
    in medical services. The track record does not lend itself to
    underestimating now to get it corrected later. So, I certainly
    hope that the Committee will take a real look at the 2018
    advance appropriation and address it so that funding is not
    left short when we get to that point 2 years from now.
        Mr. Chairman, I would like to thank you again for the
    opportunity to testify. I would be happy to answer any
    questions that you may have.
        Chairman Isakson. Thank you, Mr. Blake.
        Mr. Varela?

       STATEMENT OF PAUL VARELA, ASSISTANT NATIONAL LEGISLATIVE
                  DIRECTOR, DISABLED AMERICAN VETERANS

        Mr. Varela. Good morning, Chairman Isakson and Members of
    this Committee. On behalf of the IBVSOs, we thank you for
    providing us with the opportunity to discuss our fiscal year
    2017 budget recommendations and those proposed within VA's
    budget request. Today I will focus my oral remarks on four
    elements: compensation (comp service); vocational
    rehabilitation and employment service (voc rehab); the Board of
    Veterans Appeals (the Board); and the simplified appeals
    process recommendations.
        For comp service, we recommended an increase of 1,700 full-
    time employee equivalents (FTEEs). The administration requests
    authorization for just 400. Given the significant backlog and
    workload affecting appeals, we believe that 1,000 of the 1,700
    FTEE requested by the IBVSOs should be dedicated solely to
    appeals processing. Without adequate resources, appellants
    seeking redress of their VA determinations will continue to
    endure significant delays in the adjudication of their appeals.
    We have also recommended 100 additional FTEE for the fiduciary
    program, 300 FTEE for non-disability rating activities, and 300
    FTEE for call centers. VBA must be resourced properly to meet
    the needs and expectations of veterans, survivors, and
    dependents seeking VA benefits and services.
        Second, voc rehab. The IBVSOs have again recommended a
    staffing increase for fiscal year 2017; 158 new FTEEs are
    required, but for a second consecutive year, the administration
    has not requested a staffing level increase. Mr. Chairman, voc
    rehab program participation has increased steadily over the
    past few fiscal years to include receipt of new applications
    for entitlement determinations, which has also increased at
    roughly the same rate. Vocational rehabilitation counselors
    (VRCs), perform myriad tasks ranging from their daily caseload
    responsibilities to integrated disability evaluation system and
    veteran success on campus activities. VRCs have one of the most
    critical roles within VA. They ensure that ill and injured
    veterans have all the help, guidance, and resources they need
    to overcome their employment obstacles to lead to more
    independent and economically fulfilling lives. The IBVSOs
    recommended a staffing increase that would support a more
    appropriate client-to-counselor ratio throughout voc rehab so
    VRCs can devote the appropriate amount of time to each veteran
    in the program to ensure they are on a path to success.
        Third, the Board. We are pleased to see the
    administration's request for 242 FTEEs. The IBVSOs fully
    support this request. The additional personnel are certainly
    needed given the exceedingly large inventory of appeals now
    estimated at roughly 440,000 appeals pending review at various
    stages in the appeals process. It is important to note that
    even if the Board is provided with this staffing increase and
    VA's budget is appropriated on time, the impact of these new
    employees would not be fully realized until some time in 2018.
    Regardless of the time it will take to hire, train, and orient
    these new hires to the Board, they are desperately needed now.
    In fiscal year 2015, the Board was able to produce over 57,000
    decisions with 646 FTEEs. This averages out to be 88 decisions
    per FTEE. If the Board were to receive their staffing increase,
    thus increasing their staff size to 922, they could conceivably
    complete 81,000 appeals each year. However, to end the backlog
    and keep up with incoming appeals, future staffing increases
    will likely be needed.
        Last, Mr. Chairman, the proposal regarding a simplified
    appeals process. The IBVSOs strongly object to closing the
    evidentiary record at the point of initial decision,
    transferring jurisdiction of an appeal to the Board upon
    receipt of a notice of disagreement, and eliminating an
    appellant's option for a personal hearing before the Board.
    However, the IBVSOs are pleased that VA has engaged with us
    regarding their proposals, and we hope to find reasonable and
    tangible solutions to address the appeals process.
        I would like to highlight that we have put forth several
    recommendations to address the appeals issues, such as
    eliminating or amending the new and material evidence standard,
    fencing off decision review officers, and enacting fully-
    developed appeals legislation that passed in the House and was
    introduced here in the Senate. We would like to thank Senators
    Sullivan, Casey, Heller, and Tester for their support on this
    legislation.
        We cannot emphasize enough how important it is to move FDA
    legislation forward. FDA has the potential to provide tangible
    relief to both appellants and VA. FDA differs from VA's
    proposed simplified appeals process because while it has sped
    up appeals processing, it is a voluntary option, tempered with
    critical due process protections currently afforded to
    veterans.
        Chairman Isakson and Members of this Committee, thank you
    for allowing us the opportunity to testify today, and I look
    forward to your questions.
        Chairman Isakson. Thank you, Mr. Varela.
        Mr. Kelley?

        STATEMENT OF RAY KELLEY, DIRECTOR, NATIONAL LEGISLATIVE
                   SERVICE, VETERANS OF FOREIGN WARS

        Mr. Kelley. Mr. Chairman, on behalf of the 1.7 million
    members of the Veterans of Foreign Wars and our Auxiliary,
    thank you for the opportunity to testify today. As a partner of
    the IB, the VFW is responsible primarily for capital
    infrastructure and the National Cemetery Administration (NCA),
    so I will limit my remarks to those two areas.
        For more than 100 years, the Government solution to provide
    health care to our military veterans has been to build, manage,
    and maintain a network of Federal hospitals around the country.
    Many of these facilities need to be replaced, others need to be
    expanded, and all of them need to be maintained. VA uses what
    is known as the ``Strategic Capital Infrastructure Plan,'' or
    SCIP, to manage and identify VA's current and projected gaps in
    building access, utilization, condition, and safety.
        Major and minor construction, leasing, and non-recurring
    maintenance make up the four cornerstones of VA's capital
    infrastructure, and each work together to ensure veterans have
    access to their earned health care.
        While Congress and VA need to realign the SCIP process to
    allow VA to enter into public-private partnerships, both
    publicly and federally, to right-size VA's footprint, it must
    continue to fund the projects that are partially funded today
    and begin advance planning and design on those projects that we
    know VA needs to fund in the near future.
        Currently, there are 30 major construction projects that
    are partially funded. To completely fund these 30 projects, VA
    is going to have to invest more than $3 billion to complete
    them. These projects need to be put on a clear path to
    completion.
        Out of the next five major projects on the VA's priority
    list, two of them are seismic in nature, two of them are
    specialty clinics--one is a mental health care clinic, the
    other is a spinal cord injury center--and one is in addition to
    an existing facility to eliminate access barriers. The IB
    recommends that Congress appropriate $1.5 billion for fiscal
    year 2017 to help close these gaps.
        Approximately 600 minor construction projects need funding.
    Congress provided additional funding through the Choice Act,
    and VA developed a spending plan that will obligate over $500
    million to 64 minor construction projects over the next 2
    years. It is important to remember these funds are supplemental
    to and not a replacement for the annual appropriations for
    minor construction. With that in mind, the IB is requesting
    $749 million for VA's minor construction accounts for fiscal
    year 2017.
        This year, VA is requesting $52 million for fiscal year
    2017 leasing needs. While VA's request is adequate, Congress
    needs to authorize these leases and the leases that were
    brought forward last year in their appropriation cycle. Even
    though non-recurring maintenance (NRM) is not found in the
    construction account, NRM is very critical to VA's capital
    infrastructure. VA is investing more than $800 million in NRM
    projects that was funded from the Choice Act. But, to maintain
    the status quo, VA's NRM account needs to be funded at $1.35
    billion a year.
        The administration request is just over $1 billion for
    fiscal year 2017. The IB requests that the full $135 billion
    baseline for appropriations for this line item be appropriated
    so NRM backlog does not grow any larger.
        NCA historically asks for and properly spends what it
    needs, and the IB recommends that NCA be funded at the
    requested level of $286 million.
        VA also provides construction grants for State extended
    care facilities and State veterans' cemeteries. The IB requests
    $200 million for extended care facility grants and $51 million
    for cemetery grants.
        Thank you again for allowing the VFW to testify before you
    today, and I look forward to any questions you or the Committee
    may have.
        Chairman Isakson. Thank you, Mr. Kelley.
        [The prepared joint statement of PVA, DAV, and VFW for the
    Independent Budget follows:]
       Prepared Joint Statement of The Independent Budget Representatives

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Celli?

     STATEMENT OF LOUIS J. CELLI, JR., DIRECTOR, NATIONAL VETERANS
            AFFAIRS AND REHABILITATION, THE AMERICAN LEGION

        Mr. Celli. $103 billion in mandatory spending, money that
    goes directly to veterans based on laws passed by Congress for
    the sole purpose of attempting to make them whole again. $79
    billion in discretionary spending for things like doctors,
    claims processors, administrative staff, IT infrastructure,
    hospital maintenance, and out of that, $65 billion will be
    spent for health care alone.
        Chairman Isakson, Ranking Member Blumenthal, Members of
    this Committee, on behalf of National Commander Dale Barnett
    and the 10 percent of all U.S. American veterans that make up
    The American Legion, we welcome this opportunity to comment on
    the Department of Veterans Affairs' budget.
        In 2014, Kaiser Permanente had an operating revenue of
    $56.4 billion and a staff of 177,000 employees. Meanwhile, for
    about the same amount of money, VA ran 150 hospitals, 819
    CBOCs, 300 Vet Centers, 131 national cemeteries, and 56
    regional offices, and they do it with a staff of 350,000. That
    is double Kaiser's staff. And unlike private-sector physicians,
    VA providers are not eligible for overtime pay, so this
    weekend, when VA is conducting its second access stand-down in
    an attempt to zero out backlogged appointments, VA will incur
    very little additional expense while serving veterans. I am not
    sure we can expect the same level of dedication from private-
    level doctors ever.
        By law, VA facilitates the largest teaching hospital in the
    country, conducts statutorily mandated medical research,
    maintains emergency backup infrastructure in support of our
    national defense and national emergencies, processes millions
    of compensation claims, the appeals that result from those
    claims, cemeteries, processes GI bill payments, VA home loan
    applications, and insurance programs, all the while providing
    health care to millions of veterans in 50 States and the
    Caribbean. This is a massive budget that is broken down into
    hundreds of accounts and thousands of line items. Does VA have
    enough money? They have too much money. Is it wisely spent? Are
    there areas where VA can save money? All valid questions, but
    the bottom line is someone has got to do it, and to date, no
    one has come up with a cheaper solution.
        In the meantime, The American Legion recognizes that VA
    will need sufficient budget authority and flexibility in order
    to serve our members and the veterans of the United States of
    America, and there are certainly areas where VA can save money.
    As highlighted in the written portion of my testimony, The
    American Legion would like to draw this Committee's attention
    to three areas: consolidation of outside care; ensuring
    adequate VA staffing; and the growing number of pending
    appeals.
        With the enactment of the Choice Act, Congress added yet
    one more layer to an already complicated system of eligibility
    and payment structures. The time is now to fix it by organizing
    all of these programs under one umbrella, with a single point
    of entry and a logical physician reimbursement system that is
    streamlined and easy for primary care teams to use. This would
    not only save VA money, but it would provide better and faster
    health care for veteran patients.
        VA is a service-based industry. As in all service-based
    industries, the most expensive line item is employee burden.
    The fastest way to start saving money today is to reduce
    employee turnover. VA has a terrible problem filling vacancies
    in their mid- and upper-level leadership positions and an even
    worse record of succession planning. If VA is to successfully
    keep their positions filled, they must do a better job with
    succession planning. It is rare, if it happens at all, that a
    deputy is promoted to the position of a departing director.
    This practice leaves little incentive for the deputy to remain
    loyal to the organization and breeds resentment once the new
    director is instilled. VA has 50 percent of leadership
    positions filled by temporary fill-ins or vacant. Fifty
    percent. Employee turnover is expensive and a waste of money
    when it can be avoided.
        Finally, claims. Every time a claim goes into the appeals
    process, it costs money. Adjudicate the claim correctly the
    first time, and the rate of appeals will be reduced to a
    trickle. We address the appeals today because VA has included a
    request to revamp the appeals process in their budget
    submission. As submitted, The American Legion does not support
    this plan. That said, VA has been working closely with The
    American Legion and our VSO partners to look at ways VA can
    improve the timeliness and quality of the appeals process, and
    we are excited and encouraged by the progress that we have made
    early on in this discussion and with the openness VA has shown
    in seeking detailed input from VSOs by treating them as valued
    partners.
        Senators, my time before you is short today, so I will be
    happy to try to address any questions you may have following my
    opening statement. But, more importantly, we look forward to
    our continued work with you and your very dedicated
    professional staff.
        [The prepared statement of Mr. Celli follows:]
    Prepared Statement of Louis J. Celli, Jr., Director, National Veterans
            Affairs and Rehabilitation Division, The American Legion
    ``What we have done historically is that we have managed to a budget
            number as opposed to managing to requirements . . . as a result
            we've muddled along and not met the needs veterans deserve.''
                                      VA Acting Secretary Sloan Gibson
                                    before the House Committee on Veterans
                                    Affairs July 24, 2014 \1\
    ---------------------------------------------------------------------------
        \1\ HVAC Hearing ``Restoring Trust: The View of the Acting
    Secretary and the Veterans Community''--July 24, 2014

        When now Deputy Secretary of the Department of Veterans Affairs
    (VA) Sloan Gibson addressed this Committee nearly two years ago, he was
    not advocating the budgetary planning approach he described, but
    speaking to the problems that long standing approach could cause.
    Drawing contrasts with the planning models he was familiar with in the
    private sector, Deputy Secretary Gibson noted the historical approach
    was about managing to requirements. For VA to succeed and be great,
    they need to be able to move beyond managing requirements and move
    ---------------------------------------------------------------------------
    toward building planning based on need.

        Chairman Isakson, Ranking Member Blumenthal, and Members of the
    Committee: On behalf of National Commander Dale Barnett and the over
    two million members of The American Legion, we welcome this opportunity
    to comment on the Federal budget, and programs of the Department of
    Veterans Affairs (VA).
        The American Legion is a resolution based organization; we are
    directed and driven by the millions of active legionnaires who have
    dedicated their money, time, and resources to the continued service of
    veterans and their families. Our positions are guided by nearly 100
    years of consistent advocacy and resolutions that originate at the
    grassroots level of the organization--the local American Legion posts
    and veterans in every congressional district of America. The
    Headquarters staff of the Legion works daily on behalf of veterans,
    military personnel and our communities through roughly 20 national
    programs, and hundreds of outreach programs led by our posts across the
    country.
        What we present here is an attempt to focus on a few particular
    issues and projected needs, rather than what has been the historical
    and problematic approach of presenting a budget based on a number.
    While the budget numbers have gone up for VA, indicative of the
    commitment that Congress has shown even in tight fiscal times, there
    has still been the tendency to set a number and manage to that limit,
    rather than projecting the need and divining numbers from that need.
        In terms of future planning, and ensuring that VA's budget meets
    needs in critical areas, The American Legion directs the Committee's
    focus to three critical areas: the consolidation of outside care,
    ensuring VA's medical hiring needs are met, and addressing the rising
    backlog of appeals.
                         consolidation of outside care
        When the Choice Card program was added as a temporary emergency
    measure as part of the Veterans Access, Choice and Accountability Act
    (VACAA) of 2014 \2\, The American Legion supported the program because
    we had seen firsthand the need across the country. During 2014 The
    American Legion set up a dozen Veterans Crisis Command Centers (VCCCs)
    in affected areas from Phoenix to Fayetteville and spoke to hundreds of
    veterans personally affected by the scheduling problems within VA. The
    Choice Card program provided an immediate short term option, but also
    provided an opportunity to learn how veterans utilized the program. At
    the time, The American Legion advised gathering as much data as
    possible from veterans' use of the program to make all of VA's other
    existing authorities for care in the community \3\ better in their
    ability to serve veterans.
    ---------------------------------------------------------------------------
        \2\ Public Law Public Law 113-146
        \3\ Such as Project Access Received Closer to Home (ARCH), the
    Patient Centered Community Care (PCs) program and others
    ---------------------------------------------------------------------------
        Ultimately that has led to the current transformation in VA's
    community care programs. As directed by the Surface Transportation and
    Veterans Health Care Choice Improvement Act of 2015 (VA Budget and
    Choice Improvement Act) in July 2015, VA has developed a plan to
    consolidate all existing programs into a single community care program,
    the New Veterans Choice Program (New VCP). Generally, The American
    Legion supports the plan to consolidate VA's multiple and disparate
    purchased care programs into one New VCP. We believe it has the
    potential to improve and expand veterans' access to health care. Much
    depends, however, on the department's success in working with its
    employees, Congress, VSOs, private providers, academic affiliates, and
    other stakeholders as the agency moves forward in developing and
    implementing the plan.
        With an eye toward budgetary matters, there are two important
    considerations revolving around this new transformation that must be
    implemented in future budgets: (1) VA must have the ability to spend
    all community care monies under the new framework; and (2) the
    additional funding required to provide for the Choice Card program
    needs to be factored into future budgets.
        During 2015, VA ran into problems with budgetary shortfalls because
    of the separation in funding between Choice Card care and other
    community care authorities. Because of the strong push to ensure
    veterans were seen as quickly as possible, VA quickly exhausted care in
    the community funding, while emergency funding for the Choice Card
    program was still available. VA was forced to seek, and was granted,
    authority to move some of the $10 billion allocated to fund the Choice
    Card program over the three year pilot to cover care in the community
    costs.
        By now, as the transformation of care in the community moves
    forward to a plan with a single, overarching authority for this care
    (New VCP) the distinctions between the VACAA Choice funds and community
    care funding should be academic. While The American Legion understands
    there are reasons certain funding and accounts have limitations, and is
    not advocating for a wholesale removal of barriers for VA to move
    funding, in this instance is makes sense. Care in the community is care
    in the community, and VA must have a single stream of funding for this.
        It is important to recognize that the need for the extra funding
    was and is real. The VACAA provided $10 billion for treating veterans
    in the community through Choice because the need to fund that care was
    real. Those needs are not going away. As of last month, VA had over 6.1
    million appointments scheduled nationwide, and more than 8.5% of those
    appointments are still waiting over 30 days for treatment.\4\ VA has
    seen their number of completed appointments jump by over 2.6 million
    last year, and throughout this they still need to authorize millions of
    appointments for outside care.
    ---------------------------------------------------------------------------
        \4\ VA Pending Appointments--January 15, 2016
    ---------------------------------------------------------------------------
        The $10 billion from VACAA was provided as emergency funding, but
    in the future, we must plan for the tremendous demand on the VA system.
    This is a direct illustration of the managing to numbers versus
    managing to need contrast mentioned above. For future budgets, we must
    ensure that VA is receiving funding for care that adequately reflects
    how they must deliver that care. A robust budget for VA medical care is
    necessary, but as the past few years have shown, VA has been dependent
    on care in the community as well to provide timely care to veterans
    where they are overburdened by scheduling, staffing, or lack of
    adequate resources. This needs to be reflected in the community care
    budgets, not as an emergency measure when the problem boils over and
    out of control.
                          ensuring proper va staffing
        One reason VA may sometimes struggle to provide care within the
    Veterans Health Administration (VHA) is directly related to staffing.
    The staffing figures can be ugly. One in six positions nationally for
    some critical jobs remain vacant, and critical needs like psychiatric
    workers can see vacancy rates of 40-64%.\5\
    ---------------------------------------------------------------------------
        \5\ USA Today--September 2015
    ---------------------------------------------------------------------------
        To be fair, the VACAA already provided funding for 10,000 new
    healthcare positions, however funding new positions alone may not be
    the solution and there may be budgetary means to address some of the
    vacancies. Even when VA is hiring an additional 9% of their workforce
    they are losing a similar amount to attrition.\6\ Some of this could be
    improved with better hiring incentives and more competitive wages,
    particularly in key fields of need such as psychiatric care,
    physician's assistants, nurses and physical therapists.
    ---------------------------------------------------------------------------
        \6\ VA Office of the Inspector General (VAOIG) Report No. 15-03063-
    511 ``OIG Determination of Veterans Health Administration's
    Occupational Staffing Shortages''--September 2015
    ---------------------------------------------------------------------------
        As the Office of the Inspector General recommended, VA also bears
    additional responsibility in the form of the development of better
    staffing models and examining the red tape and bureaucratic burdens
    that stretch hiring out into a process that can take nine months or
    longer.\7\ Additional examination of where VA can better incentivize
    prospective applicants to decide on a career serving veterans would be
    helpful. We need to ensure VA has proper funding to get the best and
    brightest team members on their medical and psychological staffs
    serving veterans.
    ---------------------------------------------------------------------------
        \7\ Ibid
    ---------------------------------------------------------------------------
        The VA can further help improve their staffing, especially in
    leadership positions, with better succession planning for VA employees
    to rise to leadership levels within the organization. As an
    organization of advocates that has worked hand in hand with VA for
    decades, The American Legion notes the training programs VA had in
    place during the 1990's were better suited to creating the next
    generation of leadership than the current programs in place. The VHA
    training programs of the 1990's were specifically built to prepare
    administrative employees to assume mid-level management programs at the
    department level. This could include personnel, fiscal, medical
    administration, associate director training and other leadership
    training. The programs were replaced, over time, with VA's current
    Leadership Development Programs, but feedback The American Legion has
    garnered from interacting with VHA personnel during visits from our
    System Worth Saving Task Force has indicated these programs are not
    providing the tools the employees need to be the next generation
    leaders of VA and to lead from within. Additional consideration to
    revamping this portion of training, and ensuring this training is
    properly funded, could be a key component to reducing VA's reliance on
    the complicated process of hiring from outside VA and ultimately reduce
    the number of unfilled leadership positions.
                           the looming appeals crisis
        Last year, 2015, was the year VA was supposed to ``break the back
    of the backlog'' of veterans' claims for disability benefits. While VA
    has made substantial progress according to their public figures in
    reducing the number of initial claims--the ``claims backlog'' sits at
    around 77,000 claims today \8\ down from a peak of over 600,000 claims
    in early 2013--those numbers do not reflect the waiting period for many
    veterans who have been waiting for three or more years for their
    appeals to be decided. Over that same period the number of appeals has
    soared to over 325,000 from their level of 250,000 in 2013.\9\ VA
    defines ``backlog'' as any case pending over 125 days. Every single
    appeal represents a veteran who has been waiting for much, much longer
    than 125 days, but those 325,000 appeals are not counted as part of the
    ``backlog.''
    ---------------------------------------------------------------------------
        \8\ VA Claims Backlog Dashboard--January 30, 2016
        \9\ VA Monday Morning Workload Report--February 1, 2016
    ---------------------------------------------------------------------------
        Often the fastest way to resolve an appeal is with a Decision
    Review Officer (DRO) in a Regional Office (VARO). The DROs are among
    the most experienced employees, and can discern aspects of a claim that
    a newer employee might miss, furthermore after an initial denial the
    veteran can be better equipped to provide information the VA noted was
    lacking in the initial denial. Because everything stays within the
    VARO, correspondence with the veteran and with a service officer
    helping that veteran is direct and many claims can be resolved more
    quickly through this process. The DRO review can be one of the best
    tools for speedy adjudication of an appeal and to reduce the appeals
    backlog. However, the unfortunate case recently is that DROs have not
    always been free to handle their appeals workload.
        The Veterans Benefits Administration (VBA) has been under a
    singular mission to reduce the backlog. To this end they have forced
    over four years of mandatory overtime, and key veteran staffers
    including DROs have seen their workloads adjusted to focus on the
    initial claims, the claims that are counted in the VA statistics for
    ``backlog.'' This can have the effect of keeping DROs from devoting
    full attention to their appeals workload, and the growing appeals
    backlog cannot be seen as an accident.
        Last year, The American Legion noted that occasional mandatory
    overtime in a short term crisis is prudent management, but four
    straight years is indicative of an organization that's clearly
    understaffed. The American Legion reiterates our call for better study
    of VBA staffing models, but also notes that last year VA had proposed
    making the DRO process more robust, something we wholeheartedly
    support.

              ``DROs can often resolve appeals more rapidly than the appeal
            process at the Board of Veterans Appeals (BVA) and with greater
            accuracy and clarity than the average VA rater. Reports have
            indicated in some offices the DROs have been reassigned to
            other tasks as the pressure mounts to work on initial claims.
            It would be the hope of The American Legion that renewed
            interest in hiring and increasing the DRO force would allow
            DROs to return to their appeals duties, and help prevent a
            rising backlog in the appeals area.'' \10\
    ---------------------------------------------------------------------------
        \10\ Testimony of The American Legion--HVAC Hearing February 11,
    2015

        There have been many recent proposals for measures to transform
    appeals as the initial claims process was transformed by the Veterans
    Benefits Management System (VBMS) and the Fully Developed Claims (FDC)
    process. The American Legion is supportive of transformative thinking,
    clearly the system as it has existed in the past has many flaws and has
    not always served veterans with the ability to develop prompt and
    accurate decisions on disability claims. However, it is also critical
    to understand that there is important due process in the system to
    protect veterans, and we cannot abandon these things in the interest of
    simply faster decisions or more convenience for VA.
        Due process is important to protect veterans, especially veterans
    who may be uniquely vulnerable due to their disabilities incurred in
    the service of this Nation. It is one of the reasons the veterans'
    disability claims system has been specifically cited as ``uniquely pro-
    claimant'' in the manner it serves veterans filing for benefits.\11\
    Veterans need to depend on the ability to get a DRO review in a timely
    fashion, or to submit evidence in response to the VA when they are
    informed their claim is lacking proof of a key point, such as
    documentation of an event that happened in service.
    ---------------------------------------------------------------------------
        \11\ See Jaquay v. Principi, 304 F.3d 1276, 1280 (Fed. Cir. 2002);
    Nolen v. Gober, 222 F.3d 1356, 1361 (Fed. Cir. 2000); Hensley v. West,
    212 F.3d 1255, 1262 (Fed. Cir. 2000).
    ---------------------------------------------------------------------------
        One of the best things to help address the growing appeals backlog
    would be to increase funding for DROs to fully staff all offices and to
    add additional full time employees elsewhere within the offices to get
    the DROs back to doing what they do best, reviewing appeals in a timely
    manner. The budget should also reflect additional funding to study
    proper staffing levels within the VBA, because four years of mandatory
    overtime is a warning flag that has been waving to tell us we're not
    supplying enough staff to deal with the backlog of veterans' claims.
        Whether it is appeals or initial claims, a backlog is a backlog,
    and the budget must reflect sufficient resources to address these
    claims, otherwise veterans will be forced to do what we have become all
    too familiar with--wait.
                                   conclusion
        The VA cannot afford to be run as an entity reactive to one crisis
    after another. Effectiveness stems from long term planning, and to be
    truly effective that long term planning needs to include all
    stakeholders. While there are other areas that can benefit from
    predicting crises before they occur and providing resources to
    perceived needs, these three areas represent a key start in the sort of
    thinking that must be adopted to make VA successful in the long run.
        In order to assimilate all outside care under one cohesive
    management authority VA needs the budget flexibility to utilize the
    Choice Card funds for community care as well as to see a boost to
    community care funding commensurate with the increased demand. The
    VACAA infused $10 billion in care funding because there was an
    emergency, but the demand has not gone away and future funding levels
    must reflect this as part of the plan, not a reaction to a crisis.
        There must be attention paid to VA's hiring and incentives, and if
    additional resources are needed to secure key providers like
    psychologists and physician's assistants, then VHA must be provided
    with the funding needed to secure those key performers. That is the
    long term key to ensuring veterans get the care they need in a timely
    fashion in the system that is designed to treat their unique wounds of
    war.
        Four years of mandatory overtime and reassignment of DROs needs to
    stop if VA is going to prevent the growing appeals backlog from
    reaching disaster levels. Funding must be given to better assess the
    workforce within VBA and to provide the full time employees needed to
    accomplish the mission while keeping top assets like DROs working on
    the work they do best.

        Chairman Isakson. Thank you, Mr. Celli. Thanks to all of
    you for testifying, and thanks to your organizations for your
    advocacy.
        Mr. Varela and Mr. Celli, let me just get right to the
    point. Both of you commented directly on objections or concerns
    about reforming the appeals process and the VA's plans on how
    they might do that. We cannot continue to do what we are doing
    now, which is have a backlog of claims at almost half a
    million, some 25 years old that continue to build up. We need
    your help to come up with a solution that you support and the
    VA can implement. Will you all commit to us to work with the
    Secretary to try and make such a recommendation?
        Mr. Celli. We already have, and we continue to commit to
    working with the Secretary. We have already had several
    meetings now with Deputy Sloan Gibson. We have worked with our
    VSO partners, and I would like to associate myself with the
    comments of Mr. Varela and DAV as well.
        Chairman Isakson. Well, your comments were very timely and
    very appropriate, but being timely means we need to move
    forward. The Secretary needs some tools in his toolbox he does
    not have, and one of them is getting this whole backlog
    straightened out. So, let us work toward a date at the end of
    March trying to come together on some kind of consolidated
    agreement. Would you all work with us on that?
        Mr. Celli. We agree.
        Chairman Isakson. Mr. Varela, you commented on the fact
    that your testimony recommends 158 full-time employees in voc
    rehab and employment services, and once again this year, the VA
    has asked for none. Is that correct?
        Mr. Varela. That is correct, Mr. Chairman.
        Chairman Isakson. Are you familiar with the Workforce
    Innovation and Opportunity Act, WIOA?
        Mr. Varela. Yes, I am, Mr. Chairman.
        Chairman Isakson. Are those funds available to the VA
    commissioners in the various States to utilize for training for
    vocational rehabilitation?
        Mr. Varela. I will have to take that for the record. I do
    not know that offhand.
        Chairman Isakson. I would suggest you check that out. When
    we did the WIOA act, we made sure to give the States the
    flexibility to do veterans training and rehabilitation as a
    part of that. That is a source of funding and personnel that
    could be dedicated--it would not add personnel to the VA, but
    it would add the service to the VA's whole quiver. So, I would
    appreciate your checking on that and being sure.
        Mr. Varela. I will.
        [The information referred to follows:]
     Response to Request Arising During the Hearing by Hon. Johnny Isakson
       to Paul Varela, Assistant National Legislative Director, Disabled
                               American Veterans
        Yes, WIOA funds can be used to supply vocational rehabilitation.
        However, those funds are ``not'' dedicated solely for injured and
    ill veterans, they are available to non-veterans alike, so these two
    groups would have to compete for those resources.
        The Vocational Rehabilitation and Employment (VR&E) services within
    the Department of Veterans Affairs are dedicated solely for the use of
    injured and ill veterans.

        Chairman Isakson. Mr. Blake, your testimony recommends $75
    million in directed funding for the Million Veteran Program
    (MVP) independent of or supplemental to the funds proposed for
    the medical and prosthetic research account. Could you further
    explain the recommendation for dedicated funding for the MVP
    genetic research program?
        Mr. Blake. Well, Mr. Chairman, that is a special program, a
    genomic study that the VA is doing as sort of a longitudinal
    study of all veterans for research purposes that can evaluate
    the wide variety of issues unique to veterans.
        I think our concern is it is a heavy lift to fund that
    program to function the way it is intended, and the VA does a
    good job of expending much to all of its resources already
    dedicated for the existing medical and prosthetic research
    account. Unfortunately, this year I think the VA is projecting
    to draw about $60 or $65 million out of its appropriations
    request just for MVP. That would actually bring the medical and
    prosthetic research account number back below what was just
    approved in the appropriations bill back in December. We think
    it would be better served to actually direct funding for that
    program independent of the medical and prosthetic research line
    item.
        Chairman Isakson. Well, thank you for your testimony and
    for your organization, and I want to repeat what I said at the
    beginning to Mr. Varela and Mr. Celli and Mr. Kelley. Mr.
    Blake, this applies to you as well. If we can form a goal to
    get this appeals process worked out in terms of VA claims and
    VA's appeals, that would be a major move forward, and your
    organizations' support of doing that would be critical. We are
    at a point now where the Committee I think is prepared to move
    forward on some major legislation to resolve some of our
    problems. Let us not let another year go past by kicking the
    can down the road. Let us make the reforms necessary to get the
    VA straightened out. I appreciate your help in doing so.
        Senator Blumenthal?
        Senator Blumenthal. Thanks to all of you for being here
    today. Thank you for your service. I apologize that I was not
    here earlier, but this is my fourth Committee meeting today,
    and one of them was the Armed Services Committee where we are
    assessing the capability of our military force in the South
    Pacific, an issue I know you feel is important as well. So,
    thank you to the men and women who serve with you, and thank
    you for your advocacy here.
        I want to come back to a topic that I asked the Secretary
    about, which is the capacity of our VA to deal with women's
    health care, and although we have an all-male panel here, or
    maybe because we have an all-male panel, I want to ask how you
    feel the VA is doing judging by what you are hearing from
    members of your organizations.
        Mr. Celli. If you do not mind, I will start. The American
    Legion has a program that we call ``A System Worth Saving.'' We
    visit VA hospitals around the country. One of the things that
    we specifically look at is women's health care. Female
    veterans, as we all know, are the fastest-growing population of
    veterans, and while VA has had a very difficult time standing
    up women's health care programs, lately they have come a long
    way. There are several new women's health care clinics spread
    out across the country. Does every CBOC and every hospital have
    a women's clinic? They do not. Do they have women's sections?
    They do. Could they be improved? Yes, they can. They are moving
    in that direction. They need to make sure that they maintain
    the flexibility in spending and the funding to create that.
        Also on that, we also need to make sure we continue to keep
    an eye on child care. There are a lot of women veterans who
    will forgo their medical appointments because they do not have
    sufficient child care. VA has a program by which they can stand
    up some child care clinics within the women's health care
    clinic center. We need to make sure those remain funded.
        Senator Blumenthal. That point about women's child care is
    very, very important. I have heard this repeatedly in
    Connecticut. We have a new facility, a new clinic in
    Connecticut. It is a tremendous improvement. But, the issue of
    child care, the issue of transportation, the issue of taking
    off from work, which may affect men as well as women, but
    particularly so for women. I would welcome any other comments.
        Mr. Blake. Mr. Blumenthal, one of the things I would
    mention is while I obviously cannot speak from the perspective
    of how women are experiencing the VA, we appreciate that the VA
    has dedicated new additional resources, I think to the tune of
    about $40 million, for their programs. I would believe that
    more could even be done. The IB actually recommends about $90
    million in 2017 and an additional $100 million in 2018.
        I would also offer that while I think it would be unfair to
    say that there are not still some challenges in delivering
    health care to women veterans, one of the areas where we
    clearly see some difficulty still is in meeting the needs of
    women veterans who have catastrophic disabilities, particularly
    women with spinal cord injuries like our membership.
        If it is a challenge to deliver care just to women
    veterans, when you add on the aspect of complicated services
    and the specialized services program, that adds a whole new
    element that I do not think they have thought completely out of
    the box on yet.
        Mr. Kelley. As quick as I can, we just commissioned a
    survey and got the results back, and we are going to be sharing
    those on Capitol Hill when our folks are here next week doing
    ``Storm the Hill.'' As a recap, women veterans who access VA
    are, by and large, pleased with it. They want better access to
    women health care providers. Only 40 percent of them are being
    provided access to a female provider if they ask for it.
        Also, it goes much further than just access to health care.
    You mentioned child care. One of the leading causes of lack of
    ability to get to health care services and also employment
    services that VA has is the lack of child care. It is a
    hindrance. It is leading to homelessness and people sleeping on
    other people's couches with no way out. So, we need to tackle
    that as a larger issue.
        Also, women veterans who are over the age of 55 use VA at a
    much lower rate than the current generation of veterans, so we
    need to figure out how to do outreach to that generation of
    veterans to let them know that the services at VA are there for
    them as well.
        Senator Blumenthal. Before we go to Mr. Varela--and I
    welcome your comments, too--Mr. Kelley, the survey that was
    done, is that of the VFW members or of women veterans
    generally?
        Mr. Kelley. We sent it through our membership data pool,
    and we also shared it within the community for them to send out
    to their membership as well. We have active duty, Guard,
    Reserve, veterans from multiple organizations and walks of
    life.
        Senator Blumenthal. The number that you mentioned, 40
    percent, that is the number of women veterans who want to see a
    woman health care provider? Maybe you could just explain that.
        Mr. Kelley. It is 40 percent of those who are seeking
    health care through the women's health care clinics, 40 percent
    of them are being seen by a female provider. But, by and large,
    all of them want to be seen by a female provider.
        Senator Blumenthal. But, only 40 percent are now.
        Mr. Kelley. Yes.
        Senator Blumenthal. In addition to the other challenges
    that the VA has in recruiting more professionals, female
    professionals to deal with women's health care issues----
        Mr. Kelley. Right. In VA's defense, they are doing a great
    job of training the doctors that they have for the particular
    needs of women veterans. But, when asked, ``Would you prefer to
    have a female doctor?'' by and large, they want to have that as
    well.
        Senator Blumenthal. That may be a key to involving more
    women in seeking health care through the VA system, the
    availability of women physicians.
        Mr. Kelley. Absolutely.
        Senator Blumenthal. Thank you.
        Mr. Varela?
        Mr. Varela. Thank you, Senator Blumenthal. I would align
    our comments and sentiments with those of the VSO panel up
    here. I would also add that the women veterans that we hear
    from routinely say they do not want better care; they want
    comparable care. We do believe that the VA is moving in the
    right direction, but more can be done.
        Senator Blumenthal. I would just like to finish, with the
    Chairman's indulgence. I know, Mr. Blake, you said that the
    VA's dollar amount for health care for fiscal year 2018 is
    lower than you would like to see. Is that correct?
        Mr. Blake. That is correct. One----
        Senator Blumenthal. But--sorry, go ahead.
        Mr. Blake. No, sir. You.
        Senator Blumenthal. What is the number that you think it
    should be?
        Mr. Blake. The IB recommends for 2018, overall for medical
    care, our recommendation is about $77 billion for medical
    services alone. It is about $64 billion. One of the things I
    would point out, though--and this is a touchy subject even for
    our membership, but looking at the community care account
    alone--the VA projects to spend $12.2 billion in 2017 on all
    community care, that is through Choice and through its
    community care account. Yet their projection for 2018 reduces
    that projection by almost $3 billion. Now, I am not here
    advocating for expanding community care, but I am not sure how
    they can even square that fact.
        Senator Blumenthal. Thank you very much. I think that is a
    very, very important insight.
        I want the record to show that Secretary McDonald and his
    team are here. They are listening to you. I want to thank them
    for remaining here. It is not always the case, as you know,
    that the head of an agency stays to hear panels afterward, but
    I think it is a mark of the expertise and experience and
    insight that this panel brings to this process that he and his
    team have stayed, so I want to thank all of them for being
    here, and thank you particularly for, again, your service to
    our Nation in uniform and afterward in the organizations that
    you serve now. Thank you.
        Chairman Isakson. Thank you, Senator Blumenthal.
        Senator Boozman?
        Senator Boozman. Thank you, Mr. Chairman. I would echo the
    Ranking Member. We do appreciate your service in so many
    different ways to your country and your fellow veterans.
        We have your written testimony and we have heard your
    spoken testimony. There are lots of issues today, lots of
    concerns. If you would just take a second to go through and
    have you tell me, if you had to summarize the top one or two
    things that you are really concerned about with this budget.
    That is really what we are talking about today. What is at the
    top of the list? What are your real concerns regarding the
    numbers that we are seeing on the budget as to where they are
    going?
        Yes, sir, Mr. Blake?
        Mr. Blake. Senator Boozman, I would say from PVA's
    perspective, our concern is clearly what is a projected
    escalated growth in community care spending. I recognize it is
    a need to address access, but that does not improve access for
    PVA's members. The fact is, by and large, our members do not
    use the existing Choice Program. They do not use PC3. They do
    not avail themselves of the community care programs because
    they are best served by the SCI system of care in VA.
        For all of this work toward expanding community care
    access, PVA's members feel like they are maybe being left out
    in the cold in that discussion. VA is certainly committed to
    making sure there is access for our members in the SCI system
    of care, but there is certainly more than can be done.
        Senator Boozman. Very good.
        Mr. Kelley. I would like to include capital infrastructure.
    If you just look at the way the SCIP has ben put together, in
    between, it is around $60 billion in construction and
    infrastructure needs that VA would need to do under the current
    model to close that out over the next decade. That is a
    tremendous amount. We need to look at ways to afford VA the
    opportunity to enter into public-private partnerships, do
    sharing agreements with other Federal agencies, to ensure that
    we can reduce some of that backlog on new construction, but
    also get us out from underneath some of these older buildings
    that have non-recurring maintenance costs that are outrageous
    because they are so old. I mean, as mentioned in the first
    panel, if you are trying to maintain a building that is 90
    years old, the non-recurring maintenance value of that is much,
    much higher than a building that is 10 years old.
        So, we need to give them the ability to do those things, so
    we need to really clearly look at where are we going with
    construction in the future and then try to align that $60
    billion. What can we carve off of that if we have these other
    opportunities afforded to VA in the future?
        Senator Boozman. Very good.
        Mr. Celli. I think by far recruiting and retention. The
    independent assessment clearly highlighted some leadership
    deficiencies within the Department of Veterans Affairs that
    everybody recognizes needs to be fixed immediately. If you have
    got a skeleton crew working, you are not going to be able to
    serve veterans. If you have got people filling in for jobs that
    they are not going to be keeping, you have got a leadership
    that is unwilling to make decisions, which then goes ahead and
    contributes to whistleblower retaliation, people being
    dissatisfied with their jobs. We have got to get these
    positions filled.
        I heard the Secretary and Dr. Shulkin talk a little bit
    about reviewing the infrastructure to find out how many of
    these positions are actually needed. We cannot make that
    decision. They will have to do that assessment. But, if they do
    eliminate those positions, the people that are filling those
    positions that have been pulled from other positions will go
    back. It is a ripple effect.
        We have, like I said, roughly 50 percent over the VHA
    landscape of leadership that is either in a temporary position
    or vacant. If those individuals that are filling in those
    leadership positions are just plugging the gaps so that the
    operation can move forward, their positions are now vacant. So,
    it is a very difficult situation that needs to be fixed, and it
    needs to be fixed immediately.
        Senator Boozman. Yes, sir?
        Mr. Varela. Thank you, Senator. If I could just comment on
    the VBA portion, which is my area of oversight within the IB,
    our serious concerns lie within the amount of personnel that
    they have requested for VBA particularly to process appeals. As
    we said, we think about 1,000 FTEEs should be dedicated to
    processing appeals only.
        I would say that we have tempered that request also not
    simply saying that we need to hire 1,700 new FTEEs for that
    program specifically, but to temper that with hiring on a
    temporary basis maybe a portion of that so that once we get the
    backlog managed and once we get the inventory managed, we may
    not need all of those people.
        Also, within VR&E, one of the most important programs with
    the VA, you take wounded, injured, and ill veterans, help them
    overcome their obstacles, and put them right back into the
    workforce. I mean, how does the program continue to increase
    each fiscal year, yet their staffing levels do not? That is a
    major concern for us.
        Senator Boozman. OK. Very good. Thank you, Mr. Chairman.
    Thank you, gentlemen.
        Chairman Isakson. Thank you, Senator Boozman.
        Senator Blumenthal, thank you, and I want to thank the
    Secretary for staying. Dr. Shulkin, thank you very much for
    your testimony. To the VSOs: we depend very heavily on what you
    have to say and your active participation as we all work
    together for the best benefit of our veterans. Thank you for
    your testimony, and thank you for what you do.
        Remember what I said about our goal. We really want to try
    to take action by the end of March and have a consolidation of
    bills put together that give flexibility of direction and the
    flexibility the Secretary needs to have accountability within
    the VA; make sure we make a move forward on reducing the
    backlog of claims, not by cutting people's ability to make them
    out, but by streamlining the process to make sure it is faster
    and more accountable to the veteran.
        Thank you all for your testimony. We stand adjourned.
        [Whereupon, at 12:03 p.m., the Committee was adjourned.]

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